Baker Hughes Q2 2026: revenue fell 2% to $6.74B after divestitures and net income eased to $681M, but IET orders doubled to a record $7.1B, IET's EBITDA margin rose to 20.6% and free cash flow reached $1.1B ahead of the Chart acquisition.
Revenue
$6.7B
-2.4% YoY
Net income
$681M
-2.9% YoY
Diluted EPS
$0.68
-4.2% YoY
Operating margin
12.7%
Overview
Baker Hughes' second quarter of 2026 (three months ended June 30) looks flat on the surface and lopsided underneath. Revenue slipped 2% to $6.74 billion, and net income attributable to shareholders eased 3% to $681 million ($0.68 per diluted share vs. $0.71). But the company booked a record $10.5 billion of new orders (up 49%), almost all of it in its gas-and-power equipment business, and cash generation jumped: operating cash flow was $1,345 million vs. $510 million a year ago.
Two things distort the year-over-year comparison and are worth keeping in mind throughout:
Businesses sold in Q1 2026. Baker Hughes sold Precision Sensors & Instrumentation (PSI) to Crane for about $1.2 billion and contributed its Surface Pressure Control (SPC) business to a joint venture with Cactus (for $0.2 billion in cash plus a 35% stake). Both are gone from this quarter's revenue but present in last year's, which is the main reason revenue fell.
The Chart Industries acquisition closed after the quarter ended (July 16, 2026) at $210 per share, an enterprise value of about $13.6 billion. None of Chart's results are in these numbers, but the financing is: the balance sheet at June 30 was carrying the cash raised to pay for it.
The business has two segments: Oilfield Services & Equipment (OFSE), which sells drilling, well and production services and equipment to oil and gas producers, and Industrial & Energy Technology (IET), which makes gas turbines, compressors and LNG (liquefied natural gas) equipment and services them over their lifetime.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$6,742M
$6,910M
-2.4%
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¹ Baker Hughes' income statement has no "operating income" line. This figure is revenue minus cost of revenue, selling/general/administrative, R&D and restructuring costs (Q2 2026: 6,742 − 5,165 − 569 − 143 − 11 = 854), i.e. profit before "other income", interest and tax. Operating margin is that figure divided by revenue — the share of revenue left after running the business.
First half (six months to June 30): revenue $13,329M vs. $13,337M (flat); net income attributable $1,611M vs. $1,103M (+46%); diluted EPS $1.62 vs. $1.11. The first-half profit jump is mostly a one-off: other income included $697 million of gains on the PSI and SPC disposals, recorded in Q1. Derived operating margin was 12.2% vs. 12.3%, essentially unchanged.
Segment results: one segment shrinking, one getting more profitable
The company measures each segment by segment EBITDA — earnings before interest, tax, depreciation and amortization, a rough proxy for the cash profit from operations. EBITDA margin is that figure divided by revenue.
Segment
Q2 2026 revenue
YoY
Q2 2026 EBITDA
YoY
EBITDA margin
Margin a year ago
OFSE
$3,451M
-5%
$605M
-11%
17.5%
18.7%
IET
$3,291M
flat
$678M
+16%
20.6%
17.8%
Segment (first half)
H1 2026 revenue
YoY
H1 2026 EBITDA
YoY
EBITDA margin
Margin a year ago
OFSE
$6,688M
-6%
$1,170M
-10%
17.5%
18.3%
IET
$6,641M
+7%
$1,356M
+25%
20.4%
17.5%
OFSE. Revenue fell $166 million, "driven mainly by the impact of the SPC disposition and disruptions in the Middle East, offset by the benefit of FX in Latin America" (FX = the effect of currency moves when foreign sales are converted into dollars). The regional split shows where the Middle East conflict bit: Middle East/Asia revenue fell 13% to $1,218M and Europe/CIS/Sub-Saharan Africa fell 13% to $568M, while Latin America rose 15% to $732M and North America was flat at $933M. The Subsea & Surface Pressure Systems product line, which lost SPC, was down 14%; the other three product lines moved between -4% and +1%.
EBITDA fell 11%, and the 10-Q attributes the decline (after allowing for SPC) to "inflation, change in business mix, and lower volume, partially offset by cost-out initiatives, overall productivity, and FX." Oil prices were not the problem: Brent averaged $102.63 a barrel vs. $68.07 a year earlier and the international rig count was up 18% — yet Baker Hughes' international oilfield revenue fell 6%. The gap reflects regional disruption (the 10-Q cites the Strait of Hormuz) and the SPC sale rather than weak customer demand. Sequentially, OFSE did improve: revenue and EBITDA both rose 7% from Q1, and the earnings release says OFSE EBITDA beat the top of the company's own guidance range thanks to "increased activity and higher product shipments late in the quarter in the Middle East."
IET. Revenue was flat at $3,291M, but the mix underneath moved: Gas Technology Services (servicing installed turbines and compressors) grew 11%, Industrial Products 13% and Climate Technology Solutions 31%, offsetting a 6% drop in Gas Technology Equipment and a 33% drop in Industrial Solutions (which lost PSI). EBITDA rose $93 million to $678M, driven, per the 10-Q, by "price, productivity, cost-out initiatives, and FX, partially offset by lower volume and inflation." In plain terms: IET earned more on the same revenue because it charged more and spent less — a 2.8-point margin gain that did not come from selling more.
Orders and backlog: the real story of the quarter
Orders
Q2 2026
Q2 2025
Change
OFSE
$3,413M
$3,503M
-3%
IET — Gas Technology Equipment
$4,913M
$781M
+$4,132M
IET — Gas Technology Services
$1,314M
$986M
+33%
IET — Industrial Technology
$807M
$839M
-4%
IET — Climate Technology Solutions
$54M
$923M
-94%
IET total
$7,088M
$3,530M
+101%
Total
$10,501M
$7,032M
+49%
IET orders doubled, and the jump is almost entirely Gas Technology Equipment. The earnings release names the big wins: a Venture Global award for six LNG blocks (12 liquefaction modules), Cheniere/Bechtel equipment for Sabine Pass Train 7, and power-generation orders tied to data centers — 76 NovaLT16 gas turbines (about 1.3 GW) for Dynamis Power Solutions and an initial 1 GW award from Kodiak Gas Services. IET's book-to-bill ratio (new orders divided by revenue billed in the quarter; above 1 means the order book is growing) was 2.2, and 1.6 for the company overall.
Two cautions. Equipment orders like these are lumpy — Climate Technology Solutions went from $923M of orders a year ago to $54M this quarter, showing how much one or two contracts can swing a line. And these orders turn into revenue over several years: of the $40.1 billion of remaining performance obligations (contracted work not yet delivered — essentially the backlog), the company expects to recognize about 53% within two years. IET holds $37.1 billion of that (up $4.0 billion from March 31; Gas Technology Equipment $15.0B, Gas Technology Services $16.7B), OFSE $3.0 billion.
Profit bridge: why net income held roughly flat while revenue fell
Helped: income tax fell to $210M from $256M (effective rate 23.5% vs. 26.5%, computed from the income statement), and a $125M gain on the market value of equity securities — mainly the company's stake in ADNOC Drilling — sat in other income (a year earlier the equivalent gain was $119M).
Hurt: depreciation and amortization rose to $333M from $293M; net interest expense rose to $66M from $54M after the March 2026 bond issue ($196M of interest expense partly offset by $130M of interest income on the cash pile); $30M of deal-related costs; $24M of working-capital adjustments on the disposals; $11M of restructuring.
Stripping out those one-off items, the company's adjusted net income was $640M (+3%) and adjusted diluted EPS $0.64 vs. $0.63. GAAP EPS ($0.68) was above adjusted EPS this quarter because the equity-securities gain is excluded from the adjusted figure — so the reported number slightly flatters underlying earnings, not the other way round.
Cash flow and balance sheet
Free cash flow (operating cash flow minus capital spending, net of asset-sale proceeds) was $1,109M vs. $239M a year earlier. Q2 working capital released $523M; for the half, the 10-Q attributes the $350M working-capital inflow "mainly" to progress collections — customer prepayments on equipment orders — partially offset by contract-asset and inventory build. Progress collections and deferred income on the balance sheet rose to $6,598M from $5,904M at year-end. This is cash tied to the order surge, so part of it is a timing benefit that reverses as the equipment is built and delivered.
First-half free cash flow (computed from the cash flow statement: $1,845M operating cash flow − $636M capex + $110M asset-sale proceeds) was $1,319M vs. $692M in H1 2025.
Balance sheet ahead of Chart: cash was $15.7 billion at June 30 (vs. $3.7 billion at December 31), and long-term debt $15.5 billion (vs. $5.4 billion), after a $6.5 billion plus €3.0 billion bond offering in March. Much of that cash was held for the Chart purchase, which closed in July alongside two new $1.0 billion two-year term loans. The June 30 balance sheet therefore overstates liquidity: expect sharply lower cash and higher debt in the Q3 filing.
Dividends were $228M in the quarter ($0.23 per share, unchanged); no share buybacks in 2026 so far (vs. $384M in H1 2025).
Takeaway: Baker Hughes' results are now driven by IET, not oilfield services. IET's EBITDA margin rose to 20.6% from 17.8% on flat revenue, and its orders doubled to $7.1 billion on LNG and data-center power demand. OFSE's margin fell 1.2 points to 17.5% as Middle East disruption and inflation outweighed $100-plus oil. The $40.1 billion backlog underpins IET revenue for years, but Q3 — the first quarter including Chart and its acquisition debt — is the first real test of the combined company.
Outlook
The earnings release (Exhibit 99.1 to the July 27, 2026 Form 8-K) gave no new numeric full-year revenue or EBITDA figures, but management said the following:
CEO Lorenzo Simonelli said adjusted EBITDA beat the high end of the Q2 guidance range and the company is confident of "achieving the midpoint of our full-year guidance." The company is raising its full-year IET order guidance and lifting its "Horizon 2" (2026–2028) IET orders outlook to more than $45 billion.
In the 10-Q, management expects upstream spending to improve over the rest of the year in both international and North American markets "absent further downside pressure in oil prices", while also expecting Middle East upstream spending to decline this year, with Hormuz-related supply constraints a continuing risk to project timing and supply chains. For IET it cites "sustained strength in LNG and gas infrastructure" and a "growing emphasis on data centers", while flagging tight aeroderivative-turbine supply chains and extended lead times.
2026 capex is expected at up to 5% of revenue; cash tax payments of $0.9–1.0 billion.
Portfolio reshaping continues: the sale of Waygate Technologies to Hexagon (about $1.45 billion, all cash) has been announced.
Our read: The trajectory depends on IET turning the order surge into revenue at today's margins while absorbing Chart. IET's margin gain came from price and cost cuts rather than volume, which points to real pricing power in gas turbines and LNG equipment. The risks are execution on a much larger backlog, the supply-chain limits the company itself flags, and Chart's integration and financing costs, which will show up as higher interest and amortization from Q3. OFSE should improve from Q1 levels if Middle East activity keeps recovering as it did late in Q2, but it is no longer what drives the investment case.
Source: Baker Hughes Form 10-Q for the quarter ended June 30, 2026 (filed July 27, 2026). Guidance, adjusted (non-GAAP) figures, free cash flow and named contract awards are from the Q2 2026 earnings release (Exhibit 99.1 to the Form 8-K filed July 27, 2026). Chart Industries' results are not included; the acquisition closed after the quarter ended.