With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are mining, oil and gas exploration and services, pipelines, refining, and utilities.

Fortune Sector Leaders: Energy

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Board 2023-Baker Hughes

Primarily an energy services provider, Baker Hughes is rooted in the fossil fuel business. Still, it sees a pivotal role for its liquefied natural gas and energy transition products in a clean-energy future as companies migrate to electric power and seek greener fuel sources. The firm’s corporate governance charter emphasizes a commitment to sustainability targets, employee engagement, and ethics, the latter value demonstrated in its 2022 decision to sell the company’s Russian properties to a local operator months after Russia’s invasion of Ukraine. Lorenzo Simonelli, a GE veteran who has led Baker Hughes since it merged with GE Oil and Gas in 2017, chairs the board. He works with lead independent director W. Geoffrey Beattie, CEO of private equity firm Generation Capital. Though lean, with just nine directors, the Baker Hughes board is stacked with former CEOs from the energy, natural resources, and industrials sectors, including Lynn Elsenhans, former chair and CEO of Sunoco; Cynthia Carroll, former CEO of Anglo American; and Nelda Connors, former CEO of Atkore International, who now runs the women- and minority-owned investment firm Pine Grove Holdings. The company reported $289 million in profits in the year’s first quarter, beating analyst estimates.

Fortune Modern Board 25

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Modern Boards 2022 Baker Hughes

The board of Baker Hughes is led by W. Geoffrey Beattie, CEO of Generation Capital and former chairman of Thomson Reuters. Baker Hughes’ board scores highly in age dispersion, senior independent nonexecutive director representation, and ESG.  
 
As of spring 2022, Baker Hughes stock sat at almost 50% higher than its pre-pandemic levels. <a href="https://finance.yahoo.com/news/baker-hughes-bkr-stock-jumps-125512692.html">Analysts say</a> the company has a strong balance sheet and compares well to industry peers because of lower exposure to debt capital. The company rejoined the Fortune 500 in 2021 after previously being owned by GE for two years. Baker Hughes made the decision to pull out of Russia <a href="https://fortune.com/2022/03/19/baker-hughes-joins-oil-rivals-pausing-russian-operations-congress-houston-texas-zelensky-hailburton-schlumberger/">on March 19</a>, in the wake of Russia’s invasion of Ukraine. 
 
CEO Lorenzo Simonelli is also chairman of the board. His fellow directors include three current and former CEOs: Nelda Connors is the CEO of an investment firm and a former executive at Eaton and Ford and former CEO of Atkore International, a subsidiary of Tyco; Lynn Elsenhans is the former CEO and chairman of Sunoco; and Cynthia B. Carroll was the CEO of Anglo American, as well as a business unit CEO and president at Alcan Aluminum.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-140-Baker-Hughes

A world leader in hydrocarbon exploration, the company supplies the oil and gas industry with the tools needed for drilling and production.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-129-Baker-Hughes

Baker Hughes rejoins the Fortune 500 as a free-standing company after General Electric divested much of its ownership stake in the business in 2019. GE had acquired the energy technology and oil-field services company in 2017.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

Fortune Global 500

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Key Financials (last Fiscal Year)

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One of the big three oilfield services powers in the world along with SLB and Halliburton, Baker Hughes is the surviving offspring of Howard Hughes’s Hughes Tool business and Baker Oil Tools. The Baker Hughes name originated from the merger in 1987, when the company grew into a bigger global power. A failed takeover by Halliburton in 2016 led to General Electric taking a majority stake in Baker Hughes. But the Houston- and London-based company was spun off independently again and has since restored its position as a global powerhouse for drilling, well completions, oilfield and liquefied natural gas equipment, and much more, from the onshore U.S. to the deepwater subsea.

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Baker Hughes (BKR): Company Profile, Stock Price, News, Rankings

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Baker Hughes

baker hughes

Good day, ladies and gentlemen, and welcome to the Baker Hughes Company third quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Chase Mulvehill, Vice President of Investor Relations. Sir, you may begin.

Thank you. Good morning, everyone, and welcome to Baker Hughes' third quarter earnings conference call. Here with me are our Chairman and CEO, Lorenzo Simonelli, and our CFO, Ahmed Moghal. The earnings release we issued yesterday evening can be found on our investor website at bakerhughes.com. We will also use a presentation with our prepared remarks during this webcast, which can be found on our website.

As a reminder, we will provide forward-looking statements during this conference call. These statements are not guarantees of future performance and involve a number of risks and assumptions. Please review our SEC filings and website for the factors that could cause actual results to differ materially. Reconciliation of adjusted EBITDA and certain GAAP to non-GAAP measures can be found in our earnings release and presentation available on our investor website. With that, I'll turn the call over to Lorenzo.

Thank you, Chase. Good morning, everyone, and thank you for joining us. First, I'd like to provide a brief outline for today's call. I'll begin with an overview of our third quarter performance, including the continued strength in orders, and then provide an update on our progress integrating Chart. I will then highlight key commercial awards that demonstrate the breadth of opportunities across our portfolio before providing a high-level update on the macro environment. Prior to handing the call over to Ahmed, I will discuss our Mature Assets Solutions or MAS offering.

This represents a growing opportunity that expands our role across the life cycle of producing assets while helping customers optimize recovery, extend asset life, and maximize value. Ahmed will then review our financial performance, provide fourth quarter guidance, and update our full year expectations. To close, I will highlight the progress we are making in shaping a new, more industrialized Baker Hughes that connects capabilities to deliver integrated solutions across many end markets throughout the molecule to electron value chain.

Let's turn to slide four. We delivered another exceptional quarter, reflecting disciplined execution, strong cash generation, and continued progress in our evolution into a higher value solutions-led company. The quarter also marked our first period reporting Chart following the close of the acquisition on July 16. Adjusted EBITDA totaled $1.42 billion, with margins of 17.6% comparable to last year. We delivered strong performance across the portfolio, supported by a recovery in the Middle East activity within OFSE, consistent backlog conversion in IET, and early progress from Chart. Adjusted earnings per share were $0.70, up modestly year-over-year as strong operational performance more than offset the impact of higher interest expense.

Free cash flow remains strong at $769 million, including approximately $200 million of integration, restructuring, and closing-related cash costs associated with the Chart acquisition. Turning to orders, demand remains strong across our key end markets, driving broad-based strength within the portfolio, with the company achieving a book-to-bill ratio of 1.3x. IET recorded $5.9 billion of orders, representing a 1.7x book-to-bill ratio, including $1 billion of LNG equipment awards and $2.2 billion of Power Systems orders led by strong data center demand. This continued order momentum drove IET RPO to a new record of $39.4 billion, up 6% sequentially and 23% year-over-year, further enhancing our visibility into future revenue growth.

Supported by approximately $18 billion of IET orders year-to-date and ongoing capacity expansions, we now expect full year orders of $21.5 billion-$23.5 billion. Given the strength of demand and increased visibility into future opportunities, we now expect IET orders to exceed $50 billion over Horizon Two. The outlook reflects sustained investment across gas infrastructure, offshore production, data center, and industrial markets, along with emerging opportunities in geothermal and space. Importantly, these equipment orders expand our installed base, reinforcing the long-term earnings potential from high-margin aftermarket services, upgrades, and digital solutions over the asset life cycle.

Turning now to the recently closed Chart transaction. The acquisition represents a significant step in our strategy to broaden Baker Hughes' exposure to attractive energy and industrial growth markets. Chart adds complementary capabilities in thermal management, cryogenics, and carbon capture, enabling us to deliver more integrated solutions across the molecule to electron value chain. The combination also significantly expands our market opportunity, positioning Baker Hughes with a total addressable market of more than $400 billion with greater exposure to attractive growth markets, including data centers, gas infrastructure, geothermal, space, and industrial gases.

Turning to integration. We have made strong progress in the first 100 days, already executing $70 million of our $325 million cost synergy target. We have established clear KPIs and accountability across the organization as we deploy the Baker Hughes Business System and advance our people, systems, commercial, and operational priorities while maintaining business continuity. Ahmed will provide more details on cost synergies later in the call. Importantly, the value creation opportunity extends well beyond cost synergies. Through the Baker Hughes Business System, we see meaningful opportunities to improve Chart's manufacturing, sourcing, project execution, and commercial performance, driving better delivery, higher productivity, and significant margin improvements.

Together with the realization of synergies, these improvements give us confidence that Chart EBITDA margins can reach 22%-23% by the second half of 2028, with further expansion beyond that. We are also moving quickly to capture the commercial synergy opportunities created by the combination. Our teams are working together across our highest priority accounts with a regular cadence to identify and convert opportunities across the combined portfolio and installed base. We are already seeing early proof points, including a major power generation order secured by IET from a legacy Chart customer. This is a great example of commercial opportunities created by bringing these two companies together.

With that, let's turn to key awards on slide five. Third quarter orders demonstrated broad-based demand for our versatile portfolio across our end markets, with meaningful awards in data center, gas infrastructure, digital, nuclear, and energy upstream markets. Starting with data centers, we continue to expand our position in power generation for this rapidly growing market, securing two major awards in the United States. Year-to-date, we have now booked $4.9 billion of data center awards. These wins reinforce the strategic importance of the market and demonstrate that Baker Hughes is increasingly a critical enabler of the power infrastructure required to support the rapid growth of AI.

Reflecting the scale of the AI-driven power opportunity, we secured a major order to provide 1.1 GW of power generation capacity for a major U.S. technology company. The project will support advanced computing infrastructure for model training, inference, and physical AI workloads. Additionally, we received a major power generation order from a U.S. energy company representing approximately 500 MW of capacity for AI infrastructure development. In gas infrastructure, we delivered another strong quarter with awards spanning LNG liquefaction and feed gas transportation, along with a strategic agreement in behind-the-meter power generation.

We expanded our relationship with Venture Global through a major LNG award for the Plaquemines expansion, including IET equipment across four liquefaction blocks that utilize Chart cold boxes. This is an early example of the broader value we can deliver by combining the complementary technologies of Baker Hughes, including Chart. We also secured a substantial order for Venture Global's Cloud Connector pipeline project. Our scope includes an integrated compression solution using Frame 5/2E gas turbines to support one of the largest LNG feed gas transportation projects in the United States. Beyond these awards, we strengthened our long-term partnership with Venture Global through a new power framework agreement with GE Vernova.

The agreement covers up to 16 behind-the-meter power islands, representing up to 10 GW of generation capacity and establishes a repeatable model to support Venture Global's LNG growth and potential adjacent data center developments. Together, these awards further strengthen our long-standing relationship with Venture Global while highlighting the breadth of our leading LNG franchise across both liquefaction and pipeline infrastructure. We also continue to see strong demand for gas processing and offshore production infrastructure.

We were awarded a substantial integrated FPSO equipment package for a large offshore development. The award includes LM2500 aeroderivative gas turbines driving both power generation and gas compression equipment, highlighting the versatility of our turbine portfolio and our ability to support critical offshore infrastructure. Beyond new equipment, we continue to grow our lifecycle services business. We secured a significant long-term service agreement with SBM Offshore covering 27 LM2500 gas turbines across four FPSOs.

The agreement combines maintenance and repair services with iCenter digital service for remote monitoring and diagnostic, enhancing equipment reliability and availability across these critical offshore assets. We also received several compressor upgrade awards in the Middle East and Asia. These awards reflect continued investment in our installed base and demonstrate the value customers place on enhancing the reliability, efficiency, and performance of existing assets while creating additional high-margin, recurring aftermarket opportunities for Baker Hughes.

Turning to digital, Industrial solutions secured key Cordant wins across data center, LNG, and industrial markets, reflecting continued share gains across balance of plant applications, including third-party equipment. These awards included a preferred supplier agreement as well as sensing, protection, and asset health solutions supporting key customers. These wins demonstrate Cordant's expanding reach across both Baker Hughes and third-party installed bases.

In nuclear, we secured an order for Masoneilan control valves across six reactor units in Europe. This award strengthens our position in the growing nuclear new build market while expanding our installed base and creating attractive aftermarket opportunities over the life of these assets. Turning to Energy Upstream. Our OFSE team secured several key awards across MAS and subsea, reinforcing the breadth of our capabilities and global customer relationships. In Pakistan, we signed a multi-year MAS contract with OGDC to optimize production and recovery across more than 120 wells in mature oil and gas fields.

The program integrates our extensive subsurface expertise, surface production technologies, and digital solutions to help unlock additional value from existing assets while supporting greater domestic energy supply. In addition, bp awarded us a significant contract to provide integrated offshore production enhancement and stimulation services in the U.K. North Sea. Using our vessel-based solution and StimFORCE technology, we will support new well development and enhance recovery from mature fields. In the Middle East, we continue to deepen our partnerships with national oil companies, leveraging our broad technology portfolio to help customers improve production performance and maximize the value of their assets.

In Kuwait, KOC awarded Baker Hughes a significant multi-year contract to deploy fit-for-purpose production, AI-enabled solutions, and hybrid Kymera drill bits. We also announced plans to establish an in-country research and technology development center to accelerate innovation, optimize upstream production, and build local expertise. In subsea, Searah North Ganal Limited awarded us a substantial contract for Kutei Northern Hub development in Indonesia. Our scope includes deepwater horizontal tree systems, associated manifolds, subsea controls, and distribution systems, as well as Cordant digital solutions.

We also secured a significant integrated subsea system award from Eni for the deepwater Cronos gas development offshore Cyprus, representing an important win for our subsea business in the Eastern Mediterranean. Finally, we recently signed two strategic agreements in Venezuela that bring together capabilities across resource development and energy infrastructure. Building on more than 60 years in the country, our installed base includes the largest artificial lift footprint, significant flexible pipe infrastructure, and approximately 240 turbomachinery units across 23 sites, positioning us well to support Venezuela's long-term energy ambitions.

Collectively, these awards and strategic agreements demonstrate the breadth of the Baker Hughes portfolio, the growing value of our enterprise capabilities, and increasing demand for integrated solutions spanning molecules to electrons. Turning to the macro on slide six. The macro environment continues to underscore the importance of energy security and reliable supply. Disruptions across key producing regions have tightened inventories and supported commodity prices, reinforcing the need for continued investment in global energy production and infrastructure. While the need for longer-term investment remains clear, customers continue to take a disciplined approach to near-term spending.

Against that backdrop, we expect global upstream spending to be broadly flat year-over-year, with an improving outlook into 2027. In LNG, we continue to see a favorable outlook, with operators looking to accelerate projects where possible. With existing capacity and committed projects expected to bring global LNG capacity to approximately 800 MTPA by 2030, we see future FIDs supporting further growth to 950 MTPA by 2035 as countries increasingly prioritize supply diversification and reliable power generation. Demand also remains exceptionally strong across power markets, with AI adding another structural driver to global power demand, which is expected to double by 2040.

In the U.S. alone, approximately 100 GW of incremental data center capacity is expected by 2035, requiring roughly 18 BCF per day of incremental gas supply to meet the associated electricity demand. The challenge is not simply generating enough power, but delivering reliable and scalable power where and when it is needed. As grid constraints persist, hyperscalers and industrial customers are increasingly looking to on-site and behind-the-meter power. This plays directly to Baker Hughes' strengths across power generation and gas infrastructure, positioning us to participate across the value chain as AI drives increasing demand for both electrons and molecules.

Overall, the growing need for secure energy supply, LNG capacity, and reliable power generation reinforces long-term growth potential for our portfolio and our ability to deliver solutions that span from molecules to electrons. Now turning to slide seven. I'd like to spend a few minutes on Mature Assets Solutions, an important part of our strategy to create a more resilient, higher value OFSE business. An increasing share of upstream investment is directed towards sustaining production and improving recovery from existing fields.

For our customers, the opportunity is to recover more, produce reliably for longer, and ultimately manage the retirement or repurposing of these assets more effectively. For Baker Hughes, MAS creates a compelling opportunity to deliver outcome-based solutions. By bringing together capabilities from across our portfolio, we can optimize value across the life cycle of mature assets. Our MAS offering spans three core areas. The first is recovery optimization, where we help customers improve recovery factors and unlock additional resources from mature fields. We begin with a subsurface-led assessment to identify opportunities and then develop an integrated solution around the specific needs and economics of the asset.

This can increase economically recoverable reserves and extend field life. The second is asset productivity and integrity, where we help customers maintain and improve production while protecting the reliability of existing wells and infrastructure. By identifying performance constraints and applying the right interventions and technologies, we can restore productivity, reduce downtime, and extend productive asset life.

The third is decommissioning and repurposing, where we help customers manage end-of-life liabilities efficiently while evaluating opportunities to create new value from existing wells and infrastructure. Our objective is to reduce the cost and risk of retirement while identifying opportunities to give existing infrastructure a second life. MAS can also support customers' sustainability priorities by capturing and monetizing flared gas or repurposing existing reservoirs and infrastructure for applications such as gas storage. This can unlock additional value while supporting lower emissions operations and extending the useful life of existing infrastructure.

What differentiates our MAS approach is our ability to bring together capabilities from across Baker Hughes. We lead with our strengths in subsurface wells and production while drawing on IET technologies and selected partners where complementary capabilities are required. By early engagement and understanding the assets' economics, we can develop integrated solutions around outcomes that matter most to the customer.

We are also evolving how we engage commercially. Integrated services will remain the foundation of our model, but where our expertise and capabilities can meaningfully influence outcomes, we can selectively pursue performance-linked models. These outcome-based models are designed to operate within our customers' existing frameworks, strengthening alignment and allowing us to share in the value of our solutions helped create. These capabilities are supporting a growing pipeline of opportunities. In Pakistan, our recent agreement with OGDC demonstrates the MAS model in action.

We are beginning with an evaluation of more than 120 wells, applying our subsurface expertise to identify opportunities to improve production and recovery. As we deepen our understanding of the assets and their economics, we have the opportunity to broaden our scope and create additional value for our customer over the field life cycle. Similarly, in Libya, we are progressing an integrated program across approximately 50 wells to help our customers restore production and maximize recovery from mature fields.

The initial scope is focused on ESP change-outs with the potential to broaden our role as we demonstrate value. We are also scaling this model through coiled tubing drilling awards across the Middle East and Asia-Pacific. By combining subsurface expertise, differentiated technology, and integrated execution capabilities, we are helping customers access additional resources, improve recovery, and extend the productive life of mature fields.

Together, these examples illustrate the commercial momentum we're building across MAS. Importantly, we are pursuing these opportunities with discipline. We lead where our capabilities are differentiated and partner where complementary capabilities are required. This enables us to focus on opportunities where we can create compelling value for both customers and Baker Hughes. Our growing pipeline and disciplined approach gives us confidence in the long-term growth potential of MAS. We are targeting a high single-digit CAGR in MAS-related revenue, achieving at least $3 billion by 2030, with field management representing a significant source of incremental upside.

Ultimately, MAS is about changing how we create value. By connecting capabilities across Baker Hughes and taking a broader role across the asset lifecycle, we can help customers recover more from their existing assets while building deeper relationships and creating more durable growth for OFSE. Before I hand the call over, let me close with a few key takeaways. We delivered strong execution and commercial momentum this quarter, supported by record IET RPO and early progress integrating Chart.

Just as importantly, we continue to execute against our strategy and expand the opportunities available to Baker Hughes across the energy and industrial landscape. We are building a more industrialized solutions-led Baker Hughes with greater customer relevance, more durable revenue streams, and multiple pathways to profitable growth. We remain focused on disciplined execution and creating sustainable long-term value for our shareholders. With that, I'll turn the call over to Ahmed.

Thanks, Lorenzo. I'll begin on slide nine. As I review our financial performance, all results and comparisons will be presented on a reported basis unless otherwise noted. We delivered strong company orders of $10.8 billion in the third quarter, bringing year-to-date book-to-bill to 1.4x. Revenue was approximately $8 billion, up 14% year-over-year. Acquisitions and divestitures contributed 9% on a net basis. Adjusted EBITDA increased 14% year-over-year to $1.42 billion with IET growth and the net impact of portfolio actions more than offsetting a modest decline in OFSE EBITDA. Adjusted EBITDA margin was 17.6%, broadly in line with the prior year as IET margin expansion offset lower margins in OFSE.

GAAP diluted earnings per share were $0.41, while adjusted diluted earnings per share were $0.70, up 2% year-over-year. Higher earnings from IET and the addition of Chart more than offset lower OFSE results and increased interest expense. Turning to cash flow, we generated $769 million of free cash flow, up 10% year-over-year. Cash flow benefited from strong customer collections, including meaningful milestone and advance payments, as well as higher OFSE cash generation and the addition of Chart.

These benefits were partially offset by approximately $200 million of integration, restructuring, and closing-related cash costs, nearly all of which were one-time transaction costs associated with the Chart acquisition. Moving on to capital allocation on slide 10. At quarter end, our leverage ratio increased to 2.5x, largely reflecting the debt used to fund the Chart acquisition. Our near-term capital allocation priority remains de-leveraging the balance sheet.

We expect to begin reducing debt in the fourth quarter, supported by free cash flow generation and proceeds from the announced Waygate divestiture. These sources of cash will support the partial paydown of term loans and upcoming maturities, steadily reducing debt outstanding. With these actions supporting our de-leveraging efforts, we remain confident in our ability to achieve net leverage of less than 1.5x by the second half of 2028. Let's now turn to segment results, starting with IET on slide 11. IET orders remained strong at $5.9 billion for the quarter, bringing orders over the last four quarters to almost $22 billion.

We continue to see broad-based demand across gas infrastructure, data centers, and offshore production. Revenue of $3.48 billion was modestly above the top end of our guidance range and increased 3% year-over-year, despite an approximately 3% net headwind from the PSI and CDC transactions. GTS continued to perform well, supported by strong growth in upgrades and transactional activity. This was partially offset by lower GTE revenue, reflecting unfavorable mix and ongoing geopolitical headwinds in the Middle East. IET EBITDA increased 8% to $685 million, near the upper end of our guidance range.

Margins expanded by 90 basis points to 19.7% but came in slightly below the midpoint of our guidance range due to project timing and mix, as well as inflation. Turning to OFSE on slide 12. Third quarter revenue increased 6% sequentially to $3.66 billion, approaching the high end of our guidance range. OFS revenue benefited from strength across several international markets, including Latin America and Europe, as well as an increase in the Middle East, where revenue increased 17% sequentially. North America offshore also benefited from the absence of hurricane-related disruptions during the quarter.

SSPS maintained its positive momentum with revenue increasing 5% sequentially. Orders were strong at $1.09 billion, representing a book-to-bill of approximately 1.5x. OFSE reported EBITDA of $659 million above the midpoint of our guidance. EBITDA margins increased 50 basis points sequentially to 18.1%, reaching the upper end of the implied guidance range. Margins improved in both OFS and SSPS despite inflationary pressures from higher logistics and commodity costs. Turning to Chart on slide 13. As a reminder, our third quarter reported results reflect the period following the acquisition close on July 16th.

Orders were $831 million, resulting in a book-to-bill of 0.9x, primarily reflecting the timing of a large dry cooler award that shifted into the fourth quarter. This data center award has since been received, and we continue to expect second half book-to-bill to be above 1x. Chart performed well relative to the expectations embedded in our second half guidance. Revenue was $888 million, with strong project execution in LNG, data centers, and space. EBITDA was $156 million, resulting in an EBITDA margin of 17.6%, benefiting from favorable project mix and stronger margins across several key end markets.

We are also making good progress on cost synergies. As Lorenzo mentioned, we have already executed actions representing approximately $70 million of annualized savings. We remain on track to achieve $325 million of annualized cost synergies within three years of closing the acquisition. We expect to realize more than $10 million of cost synergies in the second half of 2026, including $3 million realized in the third quarter. Nearly all of the 2026 savings will be within the Chart segment, but over time, we expect the segment to account for approximately 75% of total cost synergies.

Beyond cost synergies, we continue to see meaningful commercial upside across the combined portfolio. Our pipeline of potential order synergies across IET and Chart continues to expand, with opportunities spanning data centers, geothermal, and space. Moving to slide 14, I will provide fourth quarter guidance and update our expectations for full year 2026. For clarity, I will speak to the midpoint of the guidance ranges. Our underlying fourth quarter assumptions for the Middle East remain mostly unchanged from our prior guidance. However, any material change in geopolitical conditions or regional disruptions could result in outcomes that differ either positively or negatively from our current guidance.

For OFSE, following the stronger than expected increase in the third quarter, we expect Middle East activity to decline sequentially in the fourth quarter. As a result, we expect revenue to return to levels broadly consistent with the second quarter, in line with our prior outlook. For IET, we expect Middle East activity to decline modestly compared to third quarter levels. However, logistics have become more challenging and could create additional pressure as we continue to execute projects for customers in the region.

Chart has significantly less exposure to the Middle East, and we do not expect the conflict to have a material impact on its fourth quarter results. For the fourth quarter, we anticipate company revenue of $8.25 billion and adjusted EBITDA of $1.46 billion, reflecting sequential revenue growth and margin expansion. For IET, we expect continued backlog execution to support fourth quarter performance. As higher margin equipment backlog converts during the quarter, we anticipate margins to improve sequentially.

Consistent with the expected closing of the transaction, our guidance assumes approximately one month of contribution from Waygate. As such, we anticipate revenue of $3.55 billion and EBITDA of $715 million. For OFSE, we expect a modest sequential decline in revenue, primarily driven by lower Middle East and North America activity. While this is expected to create margin headwinds during the quarter, benefits from previously announced cost-out actions should partially offset the impact. Accordingly, we expect revenue of $3.6 billion and EBITDA of $640 million.

For Chart, we expect fourth quarter revenue of approximately $1.1 billion and EBITDA of approximately $195 million. Together with third quarter results, this is consistent with the $350 million second half EBITDA outlook we recently provided and reflects continued execution against our integration and operational priorities. Turning to full year guidance, we have updated our outlook to reflect year-to-date performance and our fourth quarter guidance.

As a result, we are increasing the midpoint of total company EBITDA to $5.265 billion. With free cash flow totaling $2.1 billion year-to-date, we now expect full year free cash flow conversion of 45%-50%. This represents strong conversion, particularly considering the impact of Chart-related closing costs and incremental interest expense. IET order momentum remains strong. Through the first three quarters, we booked $17.9 billion of orders, already well above our initial full year guidance range. As Lorenzo mentioned, we are raising our full year IET order outlook to $21.5 billion-$23.5 billion, which at the midpoint implies a book-to-bill of above 1.6x.

This would represent a record year for IET orders, and we expect demand to remain strong into 2027, supporting IET book-to-bill above 1x. The strength in orders continues to drive backlog higher and enhance our visibility into future revenue. At the same time, the growing mix of longer lead time orders across Power Systems, LNG, and offshore production is extending the revenue conversion profile for our backlog and strengthening our visibility into revenue growth beyond 2027. As a result of this longer conversion profile, we expect more modest growth in 2027, with a greater share of revenue converting beyond next year.

At the end of the third quarter, 33% of our combined GTE and CTS backlog was scheduled to convert in 2027. By comparison, at the same point last year, 46% of the comparable backlog was expected to convert in 2026. in summary, we delivered solid execution across the company in the third quarter. IET order momentum drove RPO to a record level. OFSE delivered sequential revenue and margin improvement, and Chart performed in line with our expectations.

We also generated strong free cash flow of $769 million even after absorbing significant Chart-related closing costs. Looking ahead, our priorities are clear. We are focused on executing our growing backlog, delivering the planned Chart synergies, and using free cash flow generation to deleverage. With strong commercial momentum, greater visibility into future revenue, and a clear path back to our target leverage, we remain focused on delivering sustainable earnings and cash flow growth. With that, I will turn the call back to Lorenzo.

Thank you, Ahmed. To those following along, please turn to slide 16. As we close today, I would like to reflect on the progress we are making across Baker Hughes, the momentum we are carrying forward, and how we will build on both as we continue transforming the company. Over the past several years, we have strengthened the foundation of the company by simplifying our operating model and embedding the Baker Hughes Business System. This progress is driving enhanced margins and cash generation while creating a more resilient business. With this foundation in place, we are advancing the next phase of our strategy.

We are building on our heritage of technology leadership, connecting our capabilities to become a more solutions-led company that serves a broader range of customer needs across more diverse end markets. Chart accelerates this strategy by expanding our capabilities across energy infrastructure and industrial markets. It strengthens our position in existing markets, including data centers and geothermal, while creating new growth opportunities in adjacent areas such as space and industrial gases.

Our unmatched portfolio breadth provides a distinct advantage spanning the energy value chain from subsurface to surface and molecule to electron. The opportunity we see is to connect our capabilities in new ways to solve larger and more complex customer challenges. Through early engagement in delivering more enterprise solutions, we can expand our participation across the project and asset lifecycle, deepen customer relationships, and create more recurring aftermarket services and digital integration opportunities.

We have strengthened the foundation, evolved the portfolio, and established a clear path forward in attractive, growing end markets. Our focus is execution and converting the full potential of Baker Hughes into durable earnings growth and meaningful long-term value for our shareholders. In closing, I want to thank all of our employees for their continued commitment to our success and support for one another. Operator, we are ready to open the line for questions.

Thank you. We ask that you please limit yourself to one question. Your first question comes from the line of Scott Gruber with Citigroup.

Morning. The upsizing of the Horizon Two IET orders to $50 billion+ really stood out in the release. The strength of orders recently appears broad-based. Can you provide some more color on the building blocks across power and LNG and gas infrastructure, as well as some of the new early-stage verticals that drive the new $50 billion+ target?

Yeah, definitely, Scott, and let me break it down. Through the first nine months, IET orders totaled approximately $18 billion, including nearly $6 billion in the third quarter and more than $7 billion in the second quarter. Data centers have been a significant contributor with $4.9 billion of orders year-to-date, up approximately 500% year over year. Importantly, though, the strength extends well beyond data centers. Outside of data centers, IET orders totaled approximately $13 billion year-to-date, reflecting the broad strength of the portfolio across LNG, pipelines, upstream gas processing, and FPSO, including both the mechanical drive and power generation applications across our turbine portfolio.

We're also seeing good momentum across our higher-value digital and lifecycle offerings. As you look at IET digital orders, they're approaching $1 billion year-to-date, up nearly 20% year over year. Demand for transactional services and upgrades positions GTS bookings for another record year. That breadth and the versatility gives us increasing confidence in the Horizon Two opportunity. Since introducing the Horizon Two IET order target approximately a year ago, we've increased it by $10 billion to more than $50 billion, which reflects really two durable trends we're seeing in the marketplace.

Accelerating power generation demand, particularly in the United States with data centers, and continued investment in gas infrastructure to support secure and diversified energy supply. There are two major contributors that continue to increase the Horizon Two orders outlook. Power Systems, we expect orders to approach $7 billion this year, driven primarily by data centers, but also the growing distributed power requirements in the oil field, LNG, and downstream markets.

Across Horizon Two, we now see a path for Power Systems orders to approach $15 billion. LNG is the second major growth contributor, and we have booked approximately $4 billion of LNG equipment orders year to date, and that could reach about $5 billion this year. Entering Horizon Two, we expect LNG orders to moderate compared to the $10 billion of orders booked during Horizon One. Project FIDs have accelerated beyond our expectations, and now we believe LNG equipment orders could again approach $10 billion during Horizon Two.

As I mentioned before, beyond those two drivers, we have a resilient base business and expanding aftermarket. Every equipment award grows our installed base and creates a long-duration opportunity of services, spares, upgrades, and digital solutions. We have also identified a pipeline of more than $10 billion in enterprise opportunities, excluding Chart, that bring together capabilities from across the company.

We expect Chart to create additional upside as we evaluate opportunities to deploy its capabilities across the broader portfolio. Importantly, we have more than $50 billion target that does not depend on emerging opportunities such as space, geothermal, or further energy infrastructure investments in the Middle East. We view these as potential upside. Over time, the rebuilding and modernization of energy infrastructure in the Middle East could create additional opportunities to expand and upgrade gas and power infrastructure, advance delayed projects, and deploy our technologies and lifecycle services.

In geothermal, our subsurface thermal management, compression, and power capabilities position us to support the full development lifecycle. As you take a step back, the strength is broad-based. Significant growth in Power Systems and LNG, durable demand across our traditional IET markets, and an expanding installed base that supports attractive lifecycle growth. That end market breadth and versatility of our portfolio underpins our confidence in both the scale and sustainability of the Horizon Two opportunity.

That is great, Lorenzo. Appreciate it. I will turn it back.

Your next question comes from the line of Arun Jayaram with JPMorgan.

Gentlemen, very dynamic environment for IET, OFSE, and Chart. I was wondering if you could just comment or provide any kind of puts and takes as we think about 2027. You mentioned how your RPO is up 23% year-over-year. I know you do have some capacity constraints in IET, but give us some thoughts on just puts and takes as we start to think about next year.

Yeah. No, thanks, Arun. I'll take it. So look, really happy with the way the team has executed. As you mentioned, as we mentioned, with the continued order strength and backlog, that just improves our long-term visibility while navigating Middle East disruptions, supply chain, inflationary pressure. So as we step back and look at the total company level and we look at 2027, the first thing I'd say is book-to-bill, we expect it to remain above 1x, and revenue growth and EBITDA margin expansion for the company.

From a linearity standpoint, we would expect the normal seasonal step down in the first quarter, followed by revenue and margin progression throughout the year with a more meaningful improvement as we look at the second half. So the way we'll break it down, I think is most helpful is by segment. Starting with IET, as Lorenzo just mentioned, the demand remains quite broad-based across our different end markets, and we expect book-to-bill to remain above 1x.

In the first quarter, we have a normal seasonal decline in revenue, also driven in part by the Waygate divestiture, with margins stepping down sequentially on lower volume and ultimately absorption. But for the full year, we see organic revenue growth in the low to mid-single digit range. Growth for IET should strengthen later in the year as that incremental turbine and generator capacity comes online during the first half and begins to contribute to revenue. GTS, we expect to normalize to mid-single digit growth for that business. When you translate that to margins, we should benefit from that higher margin backlog, productivity, and mix.

Of course, as we go through this, the key variables we continue to watch are the developments in the Middle East and aeroderivative supply chain execution, particularly as the GTS mix shifts. But I would say specifically for IET, as we move into 2028, that combination of additional capacity coming online, the backlog we have and the visibility we have to book-to-bill in 2027 should support an acceleration in growth and drive further margin expansion. So excited about the setup for IET. For OFSE, we expect a normal seasonal decline in the first quarter, although the magnitude of that could be influenced by developments in the Middle East.

For the full year, our early view right now points to low to mid-single digit growth in global upstream spending. That will be led fundamentally in our view by international and offshore. We also expect continued growth in SSPS, and that will be supported by our expected growth in opening backlog. From a margin standpoint, we expect a full year margin expansion in 2027, and that is underpinned by product and service pricing as we go through to offset some of that inflation. Lastly, for Chart, the order pipeline is strong, particularly across space, LNG, data centers, and industrial gases, and it supports our view of a book to bill above 1x in 2027.

The first quarter should see a normal seasonal step down, including double-digit sequential revenue decline and lower margins, and that is for the first quarter. At the midpoint of our guidance, we expect second half 2026 revenue of approximately $2 billion. Using that annualized second half level as a baseline, we expect revenue to grow at a low to mid-single digit rate in 2027. I would emphasize the linearity throughout the year in 2027. The first half will be constrained by lower starting backlog and mix with revenue and EBITDA margins improving as we go through the year and more meaningful progress in the second half.

That progress is supported by cost synergies, the deployment of the Baker Hughes Business System, commercial momentum, and improving mix as we go through it. Overall, 2027 for Chart specifically represents an important step in progression towards 22%-23% EBITDA margins in the second half of 2028 as we laid out earlier. What this all means is we remain constructive on 2027 for the company level revenue and margin growth expansion across the company. Clearly variables to manage, including everything we talked about around Middle East, but importantly, we see performance strengthening through the year, greater momentum in the second half, and a step up for accelerated growth in 2028. Hopefully, Arun, that gives a bit of color here.

Your next question comes from the line of Stephen Gengaro with Stifel.

You've clearly seen significant momentum in data centers and just broader power generation demand. I was hoping you could discuss how you are looking at permitting capital constraints and project development timelines affecting customers' decisions. How should we sort of assess the quality of the IET backlog, as it pertains to things like project maturity, customer commitments, and sort of the visibility we have on conversion?

Yeah, definitely, Stephen. We remain very positive on the outlook for AI and ultimately the power demand associated with it. This demand is being driven by continued investment in AI model training, the early stages of inference adoption, and the emergence of physical AI workloads, which we see continuing. That growth won't be linear. The current acceleration in compute demand is increasing the need for reliable, scalable power and places an increasing premium on the speed of deployment. We're finding that in many cases, the key constraint is not demand for compute capacity, but how quickly customers can secure reliable power.

That dynamic is reinforcing demand for behind-the-meter and on-site generation where natural gas can provide dispatchable power. This is translating in strong order momentum and greater forward visibility. While permitting and infrastructure constraints can affect project timing, we're driving for qualified customers to secure capacity earlier in the development cycle. Not every project will develop at the same pace as customers work through their constraints, including permitting, fuel supply, site development, and broader infrastructure requirements.

While significant capital remains available for AI infrastructure, financing and cost can affect the timing and viability of the individual product, particularly projects particularly for the less established players. However, we view this as primarily timing related rather than risk of broad-based cancellations. Our experience across many cycles of growth, power generation, LNG, oil and gas, and other large infrastructure projects gives us a very disciplined framework for assessing project readiness. What differentiates our backlog is not simply its size, but the quality of the customers and projects behind it.

We evaluate the profile of the counterparty, access to critical technology and infrastructure, including GPUs, permitting progress, execution capability, and overall project economics, which allows us to prioritize established, well-capitalized customers with credible development plans and clear plans to execution, focusing on opportunities that can develop into long-term strategic partnerships rather than one-time equipment sales. Importantly, our contract structures provide strong protection through material non-refundable down payments and meaningful cancellation penalties.

Any proposed transfer or sale of a reservation is also subject to Baker Hughes's participation and approval. We are not seeing evidence of broad-based project attrition or cancellation across our opportunity set. Over time, this should create a substantial installed base with the potential to generate recurring services revenue over the life cycle of the equipment. It is also important to keep the opportunity in context. Power Systems is an important and growing part of our business, but Baker Hughes remains highly diversified, with Power Systems representing less than 20% of total company RPO. Overall, we believe our technology breadth, capacity, discipline, and deliberate customer selection positions us well to capture the growing opportunity while mitigating the risks.

Your next question comes from the line of Saurabh Pant with Bank of America.

Hi. Thank you. Good morning, Lorenzo and Ahmed.

Ahmed, I know you touched on this a little bit, but I want to dig in a little more on your outlook for Chart EBITDA margins, if you don't mind. Based on your guidance, you're talking about, I think, 17.5%-18% EBITDA margins in second half 2026. 22%-23% is the target for second half 2028. So that's a pretty sizable 400 basis points-500 basis points, 550 basis point kind of improvement over a two-year timeframe.

Can you please walk us through the drivers behind that? I'm thinking about near-term drivers that we should keep an eye on, but also towards the latter part of that two-year timeframe. Then should we think about margin improvement as more or less linear, or do you think it's more back-end weighted because of contracts, pricing, or maybe just the way you are resetting the supply chain?

Baker Hughes (BKR) Q3 2026 Earnings Call Transcript

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