Baker Hughes Company Q2 FY26 Earnings Analysis

- Power demand is in a multiyear growth cycle, expected to double by 2040, driven by data centers, electrification, and industrial process shifts (Page 11). - Power Systems segment shows durable, robust demand with potential upside to the midpoint of 2026 IET guidance and beyond (Page 12). - IET orders are strong; $1.4 billion Power Systems orders in Q1, contributing nearly 30% of total IET orders (Page 11). - Behind-the-meter power market projected to reach $60 billion by 2030, and annual market opportunity to exceed $100 billion (Page 11). - Baker Hughes anticipates exceeding $40 billion in IET orders by 2028 (Page 7). - Capacity is being expanded (e.g., doubling NovaLT capacity) to meet strong demand; NovaLTs sold out through 2028 (Page 13). - Investments continue in R&D and new technologies to support sustainable growth and margin expansion (Page 13). - Overall, strong momentum and strategic actions position Baker Hughes for sustained revenue and volume growth.

- IET segment shows strong growth momentum with record orders ($4.9B in Q1), supporting upside to 2026 guidance midpoint and beyond. - Confident in sustainable growth in IET driven by Power Systems, gas infrastructure, LNG, and Energy Infrastructure Technology (IET) portfolio. - $40 billion+ IET order target set for 2028 Horizon 2 reflecting positive trajectory. - Adjusted EBITDA guidance for 2026 maintained, anticipating slightly below midpoint but strong durability; IET EBITDA expected around $2.7B for full year. - EPS grew 13% year-over-year to $0.58 in Q1 (adjusted), supported by strong operational execution despite Middle East conflicts. - Portfolio optimization (e.g., Waygate sale, HMH IPO) generating proceeds to strengthen balance sheet, supporting ongoing growth and earnings durability. - Chart acquisition expected to enhance value delivery with $325 million in targeted cost synergies, aiding profit improvement. - Ongoing focus on operational discipline, productivity gains, and successful integration critical to future earnings expansion.

- Baker Hughes is doubling NovaLT gas turbine capacity to meet strong demand, with the product sold out through 2028. - Capacity expansion includes added manufacturing ability for BRUSH product lines (generators and synchronous condensers), which will materially increase annual revenue. - A new aftermarket NovaLT facility in Italy has been inaugurated to support growing services. - The company is maintaining manufacturing and supply chain flexibility to enable further capacity increases as needed. - Investments are being made in next-generation engine technology development and emissions reduction to enhance the Power Systems portfolio. - Strategic capacity assessments are ongoing across the entire Power Systems portfolio, not just NovaLT turbines. - Focus on disciplined, medium- and long-term supply-demand dynamics guides any expansion beyond current doubling plans. - These capacity and innovation investments aim to drive sustainable growth, margin expansion, and long-term shareholder value.

- Baker Hughes completed a long-term debt offering in March, raising $6.5 billion in U.S. bonds and €3 billion in European bonds, marking their inaugural European bond offering. - Proceeds from this bond issuance will be allocated toward closing the Chart acquisition. - The company expects to generate approximately $3 billion in gross proceeds from divestitures in 2026, including the IPO of HMH and sale of Waygate Technologies. - The company aims to reduce its net debt to adjusted EBITDA ratio to between 1 and 1.5 times within 24 months after the Chart transaction closes, using free cash flow and divestment proceeds. - No explicit plans for future equity fundraising are mentioned; the focus is on disciplined capital management and portfolio optimization to strengthen the balance sheet.

- IET recorded a record $4.9 billion in orders in Q1, driven by Power Systems, LNG, and gas infrastructure. - Over the last 4 quarters, IET orders totaled $16.6 billion, a 25% increase versus the prior 4 quarters. - Power Systems secured $1.4 billion in orders in Q1, with a book-to-bill ratio of 1.5x for IET, leading to a record RPO of $33.1 billion. - NovaLT gas turbines are effectively sold out through 2028 due to strong inbound demand. - Frame 5 gas turbines have available capacity in 2027 and 2028. - Capacity for BRUSH generators and synchronous condensers has been increased to support orders. - Baker Hughes expects to achieve at least the $14.5 billion midpoint of full-year IET order guidance with potential upside beyond $40 billion for the 2028 Horizon 2 target. - Robust order backlog supports sustained growth and service aftermarket expansion.