Baker Hughes beat its Q2 EBITDA guidance as IET orders doubled to a record $7.1B and the Chart acquisition closed. The company raised its full-year IET order forecast and now sees more than $45B in Horizon 2 backlog.
Baker Hughes beat its own Adjusted EBITDA guidance in the second quarter, helped by a record $7.1 billion in Industrial & Energy Technology orders and the closing of its Chart Industries acquisition. The company also raised its full-year IET order forecast and pushed its Horizon 2 target above $45 billion.
Revenue came in at $6.74 billion, up 2% sequentially but down 2% from a year earlier. The year-over-year drop reflected the divestiture of Baker Hughes’ Precision Sensors & Instrumentation and Surface Pressure Control businesses. Adjusted EBITDA reached $1.23 billion, up 6% from the first quarter. Adjusted net income was $640 million, up 12% sequentially.
CEO Lorenzo Simonelli credited "disciplined execution" for the beat, particularly in the Middle East where a complex operating environment had weighed on expectations. Oilfield Services & Equipment EBITDA rose 7% sequentially to $605 million, driven by higher volume, price, and cost-out initiatives. North America revenue was flat at $933 million, but international revenue jumped 9% to $2.52 billion on strength in Latin America, the Middle East, and Asia.
The market focused on IET, the segment that builds gas turbines, compressors, and power-generation equipment. IET orders doubled from a year ago to $7.1 billion, pushing backlog up 19% to a new all-time high. The company said demand was broad-based – not just data centers and LNG, but also industrial and energy infrastructure markets. The book-to-bill ratio for the segment was 2.2, meaning Baker Hughes booked more than twice the revenue it shipped.
Simonelli said the company was raising its full-year IET order guidance and increasing its Horizon 2 outlook – covering the next three to five years – to more than $45 billion. "Given broadening customer demand, a growing pipeline, and our decision to further expand capacity," he said on the earnings call.
The Chart acquisition, which closed during the quarter, adds thermal management, air and gas handling, and compression capabilities. Baker Hughes paid $1.7 billion for the industrial gas equipment maker in a deal first announced in May. Simonelli called it "a major milestone in our evolution as a leading industrialized energy solutions company."
RPO, or backlog, ended the quarter at $40.1 billion, up $4 billion from Q1. IET carried $37.1 billion of that total, split between $15 billion in gas technology equipment and $16.7 billion in gas technology services.
Free cash flow was $1.11 billion for the quarter, against capital spending of $236 million. GAAP earnings per share were $0.68; adjusted EPS was $0.64.
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