Baker Hughes (NASDAQ: BKR), the third largest oilfield services company in the world, posted strong numbers for 3Q25 last week, beating the market estimate for both revenue and earnings. The company reported revenue at $7.0 billion, driven by continued momentum in Industrial & Energy Technology (IET) segment, offsetting softness in Oilfield Services & Equipment (OFSE). Interestingly, the management raised its full-year 2025 guidance for revenue, adjusted EBITDA, and orders across its core businesses, reflecting confidence in operational execution and end-market resilience. The company also reaffirmed that the Chart Industries acquisition remains on track to close by mid-2026, with anticipated cost synergies of approximately $325 million.
Operational and Financial Performance
The OFSE segment recorded $3.64 billion in revenue, down 8% y-o-y, reflecting softer volumes across Latin America and Europe/Sub-Saharan Africa. However, growth in North America (+6% sequentially) and the Middle East/Asia (+3% y-o-y) cushioned the decline. Segment EBITDA fell 12% y-o-y to $671 million, with margins dropping to 18.5%, impacted by inflationary pressures and a less favorable mix.
In contrast, IET continued to grow, underpinned by robust LNG and power generation demand. The segment posted $3.37 billion in revenue, up 15% y-o-y, while orders surged 44% to $4.14 billion, marking one of the strongest quarters in the company’s history. EBITDA increased 20% y-o-y to $635 million, with margin expanding to 18.8%, supported by higher volumes and favorable pricing partially offset by lower cost productivity and cost inflation.
The Houston-based company reported adjusted EBITDA at $1.24 billion, reflecting margin resilience despite cost inflation and acquisition-related expenses. The net income was at $609 million, down from $766 million a year ago, while adjusted net income improved to $678 million, up 2% y-o-y.
Cash flow generation remained strong, with operating cash flows at $929 million and free cash flow at $699 million. The management is projecting full-year free cash flow conversion between 45% and 50% for 2025. Capital expenditure (net) for the quarter was $230 million, primarily directed toward technology investments and integration initiatives. The company closed the quarter with $2.7 billion in cash and $6.0 billion in long-term debt. Further, the company increased its quarterly dividend to $0.23 per share, up from $0.21 compared to same quarter last year, which will be fully funded from its operating cash flows.
Update on Chart Acquisition
The LNG market is expected to witness sustained growth over the next 5 years driven by rising global energy demand, push for decarbonization, and infrastructure expansion in emerging markets. Baker Hughes’ acquisition of Chart Industries will deepen the company’s exposure to clean energy and gas infrastructure market, while strengthening its position in the LNG market.
During the 3Q25 earnings conference call, the management confirmed that the company has received shareholder approval for the announced acquisition of Chart Industries for $13.6 billion. It aims to achieve a net debt to adjusted EBITDA ratio of 1 to 1.5 times within 24 months following the close of the deal, which is expected by mid-2026. Besides, a targeted and seamless integration is estimated to realize $325 million in anticipated cost synergies. The integration will be led by Mr. Jim Apostolides, Baker Hughes’ Chief Infrastructure and Performance Officer, who has strong experience of leading some post-acquisition leadership teams.
Strategic Progress and Outlook
Orders surged 23% year-over-year (y-o-y) to $8.2 billion, driving the remaining performance obligations (RPO) or total backlog to a record $35.3 billion and IET book to bill ratio at 1.2. During the quarter, Baker Hughes secured some major contracts which included turbomachinery awards for Next Decade’s Rio Grande LNG and Sempra’s Port Arthur Phase 2 project. Further, the company will also provide digital solutions for the Rio Grande project. BKR also won a new long-term service contract for BP’s Tangguh LNG facility in Indonesia and extended agreement with Fembina Pipeline for the Alliance Pipeline system upgrade.
The company also received a significant, multi-year award from Aramco to expand integrated underbalanced coiled tubing drilling operations in Saudi Arabia. The contract includes six new units and extensions of four existing units to support re-entry and greenfield drilling projects across the country. Moreover, the company has managed to secure new subsea and production system contracts with Petrobras and Turkish Petroleum.
Over the next three years, Baker Hughes’ aims to secure at least $40 billion in IET orders, given its strong market visibility and robust technology portfolio. It is also committed to achieving at least 50% free cash flow conversion by FY 2028, excluding the expected accretive benefits from the Chart acquisition. Moreover, the company raised its full year revenue expectations to $27.0-$27.8 billion and adjusted EBITDA guidance to $4.74 billion, backed by solid growth momentum in the IET space.
Further, the management reiterated confidence in its Horizon 2 strategy, which aims to accelerate growth in higher-margin industrial and energy technology markets while improving capital efficiency. Since the launch of Horizon 1, adjusted EBITDA margins have expanded by 320 basis points. Under Horizon 2, Baker Hughes aims to reach 20% total company margin by FY 2028, driven by disciplined execution, process optimization, and cost control. Management also expects to unlock $1 billion from non-core asset sales to fund strategic growth initiatives. Furthermore, the company highlighted AI and digitalization as transformative levers across its operations — expected to drive productivity improvements, efficiency gains, and new revenue opportunities within energy transition markets.
Conclusion
Baker Hughes’ stock is almost 12% higher year-to-date, while its counterparts – Schlumberger and Halliburton – have been struggling. The company’s third-quarter performance reinforced its strategic evolution into a more balanced, technology-driven energy company. While near-term softness in OFSE remains a headwind, the IET segment continues to deliver robust growth and margin expansion, validating the company’s long-term strategic pivot. Significant order inflows, and a growing backlog, along with major contract wins across LNG, power generation, and digital solutions will strengthen Baker Hughes’ strong competitive positioning in energy technology markets.
In addition, the integration of Chart Industries by mid-2026 is expected to expand the company’s installed base and deliver efficient results, while unlocking meaningful cost and revenue synergies over the medium term. Finally, with a targeted and disciplined execution under its Horizon 2 strategy, Baker Hughes is well positioned to sustain profitable growth and capitalize on the accelerating energy transition, while delivering sustained shareholder value.