Baker Hughes Company BKR raised its Industrial & Energy Technology (IET) order outlook during its third-quarter 2026 earnings call, citing demand for data center power and gas infrastructure. Management also flagged longer project lead times that shift more backlog conversion beyond 2027.
Adjusted earnings of $0.7 per share beat the Zacks Consensus Estimate of $0.63, while revenues of $8.03 billion topped the $7.76 billion estimate. The call focused on order visibility, Chart integration and balance-sheet priorities.
Baker Hughes Company Price, Consensus and EPS Surprise
Baker Hughes Company price-consensus-eps-surprise-chart | Baker Hughes Company Quote
BKR Expands IET Order Ambitions
Chairman, president and CEO Lorenzo Simonelli said that IET booked $5.9 billion in quarterly orders, lifting remaining performance obligations to a record $39.4 billion.
Simonelli raised the 2026 IET orders outlook to $21.5-$23.5 billion and expects more than $50 billion in orders over Horizon 2, covering 2026-2028.
Simonelli also cited $4.9 billion in year-to-date data center orders, including an award for 1.1 gigawatts of power generation for a major U.S. technology company.
Responding to a Citigroup analyst, Simonelli identified Power Systems and LNG as major contributors. He sees Power Systems orders approaching $15 billion and LNG equipment orders approaching $10 billion over Horizon 2.
Baker Hughes Weighs Backlog Timing and Quality
CFO Ahmed Moghal said that only 33% of the combined Gas Technology Equipment and Climate Technology Solutions backlog was scheduled for 2027 conversion, versus 46% of comparable backlog scheduled for 2026 a year earlier.
Asked by a JPMorgan analyst about 2027, executive vice president and CFO Moghal projected low-to-mid-single-digit IET organic revenue growth, with stronger second-half activity as added turbine and generator capacity becomes productive.
A Stifel analyst questioned project maturity and financing exposure. Simonelli emphasized customer screening, material nonrefundable deposits and cancellation penalties, adding that the company was not seeing broad-based cancellations.
BKR Targets Chart Margin Gains Through 2028
Simonelli said that the Chart acquisition expanded Baker Hughes’ thermal management and cryogenic capabilities. Executed integration actions represent $70 million in annualized cost savings against a $325 million cost-synergy goal.
Moghal reported $888 million of Chart revenues and $156 million in segment EBITDA since the July 16 closing, representing a 17.6% margin.
In response to a BofA Securities analyst, Moghal reiterated a 22-23% Chart EBITDA margin target for the second half of 2028. He expects improvement from cost savings, project mix and operating discipline, weighted toward 2028.
Baker Hughes Pivots Toward Mature Asset Services
Moghal mentioned that OFSE revenues rose 6% sequentially to $3.66 billion, helped by a 17% increase in Middle East activity. Segment EBITDA margin improved to 18.1%.
Simonelli described Mature Asset Solutions as a means to help operators raise recovery and extend field life. He targets at least $3 billion in related annual revenue by 2030.
Asked by a Barclays analyst about regional recovery, Simonelli cautioned that Middle East activity could moderate near term, while a more stable environment could support broader energy and infrastructure investment.
BKR Details Q4 Guidance and Deleveraging
Moghal guided fourth-quarter company revenues of $8.25 billion and adjusted EBITDA of $1.46 billion, with IET improvement offsetting softer OFSE activity.
For 2026, Moghal increased the midpoint of adjusted EBITDA guidance to $5.265 billion and expects free cash flow conversion of 45-50%.
Moghal said that leverage reached 2.5 times after the Chart acquisition. Free cash flow and the planned Waygate sale are expected to fund debt repayment toward net leverage below 1.5 times by the second half of 2028.
Baker Hughes Stresses Execution Over Near-Term Pace
Simonelli emphasized building a more industrialized, solutions-led business, using equipment installations to develop longer-term service and digital revenue opportunities.
Moghal stressed backlog execution, Chart synergies and debt reduction. Management remains constructive on growth but identified Middle East disruptions, inflation and supply-chain execution as variables affecting the near-term trajectory.
BKR’s Zacks Rank and Style Scores
BKR carries a Zacks Rank #2 (Buy), indicating a favorable near-term earnings-estimate-revision profile. Its Value Score of D, Growth Score of C and Momentum Score of F provide less supportive style signals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The VGM Score of D combines these value, growth and momentum characteristics and falls below the A or B grades Zacks favors alongside top-ranked stocks. The Zacks Rank can change as analysts revise estimates following the reported results.
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This article originally published on Zacks Investment Research (zacks.com).
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
