Baker Hughes (BKR) Q3 2026 earnings review
Baker Hughes' backlog reaches a record, but its profit falls
Baker Hughes booked orders faster than it turned them into sales, while buying Chart cut its reported profit. IET, the division that builds gas turbines and LNG equipment, took $5.9 billion of orders for data centers and gas plants, and its backlog set another record. Revenue rose 14%, but nearly all of the gain came from Chart, the cryogenic equipment maker it bought in July; without it, sales grew about 2% by our math.
| Revenue excluding Chart | $7.1B +2% from a year ago, by our math |
|---|---|
| IET orders | $5.9B +42% from a year ago |
| Profit per share | $0.41 reported; $0.70 excluding one-offs −33% and +2% from a year ago |
| Three-year IET order target | Raised to $50B plus more than $45B three months ago |
⚖️ Verdict: 🟢 Bullish
The story got better because the orders and a raised three-year target show demand for power and gas equipment held up after a record first half. The bad news: the debt that paid for Chart is costly, so net income fell 33% and profit per share excluding one-offs barely rose.
The question now is whether the backlog becomes revenue fast enough to cover the interest on the new debt. If turbine shipments pick up next year, profit grows on its own; if not, profit depends on Chart's cost savings. January's results and the outlook for next year will tell.
🐂 Bull Case
Power and LNG Orders Fill a Record Backlog
Industrial & Energy Technology, or IET, builds the gas turbines, compressors and LNG equipment that power plants and gas exporters order. It booked $5.9 billion of orders, which chief executive Lorenzo Simonelli called its "second-largest order quarter", and its backlog of signed work reached a record $39.4 billion.
Data centers drove the biggest deals. A major US technology company ordered 43 gas turbine packages for 1.1 gigawatts, "to provide reliable, scalable power for advanced computing infrastructure supporting AI model training, inference, and physical AI workloads". Venture Global added equipment for four more liquefaction blocks at its Plaquemines LNG plant.
- IET orders: up 42% from a year ago
- Backlog added in the quarter: $2.3 billion, against $0.8 billion a year earlier
- Orders divided by revenue: 1.7, so the division booked far more than it shipped
Because every turbine sold later needs maintenance, the backlog carries value beyond the first sale: the services side now holds $16.8 billion of signed work, more than the equipment side. But orders are uneven, so three quarters above $4.9 billion matter more than any single one.
What to watch: fourth-quarter IET orders in late January. Another quarter above $4 billion would make the raised three-year target of $50 billion plus look easy to reach.
Chart Earns $156 Million in Eleven Weeks
Chart Industries makes cryogenic tanks, cold boxes and cooling fans; Baker Hughes paid $14.2 billion in cash for it in July. In its first eleven weeks as a segment it produced $888 million of revenue at a 17.6% margin, close to the group's own.
- Orders: $831 million, of which $244 million was aftermarket parts and service
- Orders divided by revenue: 0.94, so Chart shipped a little more than it booked
Chief executive Lorenzo Simonelli said "early synergy actions reinforce our confidence in the value creation opportunity ahead", and Venture Global already paired IET turbines with Chart cold boxes in one award. But orders ran below revenue, so the $325 million cost-saving target is still the only number on the value of the deal.
What to watch: Chart's fourth-quarter orders, its first full quarter. Orders above revenue would show the wider sales network is winning new work rather than finishing contracts Chart already held.
Subsea Orders and Europe Lift the Oilfield Business
Oilfield Services & Equipment, or OFSE, sells drilling and production services to oil producers and has lagged the group for two years. This quarter it turned up: revenue rose 6% from the previous quarter and orders climbed 19%, because international customers restarted work.
Europe, Russia and sub-Saharan Africa led, with revenue of $770 million, up 29% from a year ago. Subsea equipment orders, the wellheads and trees placed on the seabed, reached $1.09 billion, with awards from Eni off Cyprus and Searah in Indonesia. Chief executive Lorenzo Simonelli pointed to "a meaningful improvement in the Middle East" and to customers who "increasingly prioritize maximizing recovery and extending asset life".
What to watch: OFSE revenue in the fourth quarter against last year's $3.57 billion. Growth from a year ago, not only from the previous quarter, would show the recovery is more than seasonal.
🐻 Bear Case
Buying Chart Cut Reported Profit by a Third
"Baker Hughes delivered another strong quarter, reflecting disciplined operational execution and broad-based commercial momentum across the company," chief executive Lorenzo Simonelli said. The reported figures say otherwise: net income fell 33% to $411 million, while profit per share excluding one-offs barely rose, because the debt and accounting charges from buying Chart landed in the same quarter as its revenue.
- Interest expense: $177 million, up from $56 million a year ago
- Amortisation of acquired intangibles: $165 million, up from $10 million
- Transaction costs: $158 million, left out of adjusted profit
- Selling, general and administrative costs: 9.1% of revenue, up 0.6 percentage points
The gap between the two profit measures is the point. Adjusted EBITDA margin held at 17.6% against 17.7% a year ago, so Chart added profit at the group's existing rate, and most of that extra profit went to lenders. Interest cost rose $121 million while adjusted EBITDA added $177 million, and interest stays inside adjusted earnings.
What to watch: the interest line in the fourth quarter, the first full one with Chart. By our math the quarterly bill is now near $180 million, so adjusted profit per share needs Chart's earnings just to grow.
Gas Equipment Revenue Falls While Backlog Grows
Gas Technology Equipment, or GTE, is the IET product line that builds the turbines and compressors data centers and LNG plants order. Most new orders land there, yet its revenue fell 7% from a year ago to $1.58 billion, a second straight decline. Last year's fourth quarter was $1.85 billion.
IET's margin also slipped to 19.7% of revenue from 20.6% last quarter, which the company put down to "a change in business mix and inflation". Services revenue, the maintenance side, grew 12%, so the pressure sits in equipment. Management said in April that its NovaLT turbine line is sold out through 2028, and this release cites "ongoing capacity expansions", so the backlog cannot ship faster until new factory space opens.
The slow conversion matters because GTE's backlog stands at $16.5 billion, by our math more than ten quarters of current shipments. That is why this quarter's orders did not lift IET revenue, which rose only 3%, and why order growth does not yet show in profit.
What to watch: GTE revenue in the fourth quarter against last year's fourth-quarter figure. A number back near that level would show the backlog has started to flow into shipments.
Middle East Sales Remain 13% Below Last Year
The Middle East conflict that closed the Strait of Hormuz this year hit OFSE, the oilfield division, hardest, because the region is its largest market. Revenue from the Middle East and Asia was $1.26 billion, 13% below a year ago, and barely moved from the previous quarter.
The company said part of the drop reflects the sale of its Surface Pressure Control business into a joint venture. But North America was also 3% below a year ago. OFSE's margin fell to 18.1% of revenue from 18.5%, which management attributed to "the linearity of variable expenses" and a change in mix, so the division earned slightly less than last year on nearly the same revenue.
What to watch: Middle East and Asia revenue in the fourth quarter against last year's $1.39 billion. Reaching that level would show the region's recovery is complete.
👓 Other Themes
Debt Tripled to Pay $14 Billion for Chart
Baker Hughes paid $14.2 billion in cash for Chart, so its total debt tripled to $18.3 billion since the end of last year. By our math net debt is 2.8 times earnings before interest, tax, depreciation and amortisation over the past year. The company bought back no shares this year, against $384 million a year earlier, while the dividend stayed at $0.23 a quarter.
💲 Other KPIs
Up 10% from a year ago. Free cash flow was 54% of adjusted EBITDA, the share of profit that turned into cash, and 55% over nine months. That is above the roughly 50% the company targeted for the year in April, helped by customer prepayments on new orders. Capital spending stayed near 3% of revenue.
Progress collections and deferred income, cash customers have paid for equipment not yet delivered, rose to $8.0 billion from $6.6 billion at the end of June. At year-end it was $5.9 billion. Chart brought some of it, but the rest reflects down payments on the orders IET booked, which is why cash arrived ahead of revenue.
Down 0.2 percentage points from a year ago, because the cost of making and delivering products took 76.0% of revenue. The margin has sat between 22.8% and 24.3% over the past five quarters, so Chart's first weeks and the loss of the sold businesses have not changed the group's cost structure yet.
🔮 Guidance
Raised. The three-year target for IET orders is now at least $50 billion, against more than $45 billion three months ago. It began the year at $40 billion. IET has already booked $17.9 billion in 2026. By our math the target needs only about $3.6 billion a quarter for the rest of the period, well below this year's pace of about $6 billion, so it reads as a minimum.
Raised again, without a number. The last figure the company gave was $13.5–15.5 billion in April. After nine months IET has booked $17.9 billion, already past the top of that range by our math, so any fourth-quarter order widens the gap. Two raises in a row with no range attached mean the three-year target is now the only outlook readers can test.
❓ Key Questions
What are full-year revenue and profit with Chart included?
In April the company set 2026 revenue at $26.2–28.3 billion and adjusted EBITDA at $4.55–5.15 billion, before Chart, and in July voiced confidence in the middle of those ranges. This release restates neither, so Chart's fourth-quarter contribution is unknown.
How much of the $325 million in savings is captured?
Simonelli cited "early synergy actions" but gave no dollar figure, timing or cost to achieve. The savings are the main stated reason the price paid for Chart makes sense, so a number matters more than the phrase.
When does the $16.5 billion equipment backlog ship?
Gas Technology Equipment revenue fell for a second quarter while its backlog grew to more than ten quarters of shipments by our math. A delivery schedule for 2027 and 2028 decides whether revenue growth catches up with orders.
How much of the Middle East drop is the sold business?
Middle East and Asia revenue is 13% below last year, and the company says the Surface Pressure Control sale explains part of it without giving a split. Without that split, readers cannot measure how far the region has recovered.
When do buybacks resume, and at what debt level?
Net debt is about 2.8 times the past year's adjusted EBITDA by our math, and the company bought back no shares in 2026. It has not said what leverage it wants before returning cash beyond the dividend.