Baker Hughes missed Q2 EBITDA estimates by 2% as a mix shift toward gas turbine equipment squeezed margins in the IET segment. LNG pipeline remains the strongest demand driver.
Baker Hughes missed adjusted EBITDA estimates for the second quarter, dragged by a mix shift toward lower-margin gas turbine equipment and away from the higher-margin aftermarket services that typically pad the segment's profitability.
Adjusted EBITDA came in at $1.28 billion, roughly 2% below the $1.31 billion consensus compiled by the company. The miss was concentrated in the Industrial & Energy Technology segment, where EBITDA of $752 million fell short of the $780 million analysts had forecast. The oilfield services and equipment business hit its target at $527 million.
Total company orders of $7.95 billion were roughly flat year over year and came in below the $8.2 billion consensus. The OFSE segment posted orders of $3.18 billion, down 15% from the prior-year period, driven by lower subsea and surface production awards. IET orders, at $4.77 billion, rose 10%, supported by gas turbine awards for LNG and data-center power projects.
Revenue in the IET unit rose 3% year over year to $3.93 billion. EBITDA margins contracted roughly 60 basis points sequentially to 19.1%. "The product mix in the quarter was not where we wanted it to be," CFO Ahmed Moghal said on the call.
The LNG equipment pipeline remains the strongest demand driver for Baker Hughes. The company said it is tracking more than 120 million tonnes per annum of prospective LNG capacity, with final investment decisions expected over the next 18 months. "We see the LNG opportunity continuing to build," CEO Lorenzo Simonelli said. "The data center market is an emerging source of demand for gas turbines that we did not have five years ago."
Free cash flow generation was a bright spot. Baker Hughes produced $677 million in free cash flow during the quarter, up from $475 million in the first quarter and $522 million a year earlier. The company ended June with $3.4 billion in cash and marketable securities, up from $3.1 billion at year-end.
Share buybacks totaled $328 million in the quarter. The company repurchased $1.1 billion of stock in the first half of 2026. Management maintained its 2026 adjusted EBITDA guidance of $5.3 billion to $5.7 billion, implying a second-half ramp that many analysts viewed as aggressive given the first-half run rate.
"The second-half guide requires both IET margins to recover and OFSE to have a strong order quarter," said Arun Jayaram of JPMorgan, who rates the stock overweight. "We see the path as achievable but narrow."
Baker Hughes shares fell 2.3% in morning trading Thursday, underperforming the broader energy sector. The stock carries an Alpha Score of 48 out of 100, reflecting mixed momentum and valuation metrics. The BKR stock page tracks the key levels.
The company will hold its investor day on Sept. 15, where Simonelli said management would provide a multiyear outlook for the LNG and gas turbine cycle.
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