Baker Hughes Q3 2026: Chart lifts revenue 14% to $8.0B, but deal costs cut EPS 33% to $0.41

Baker Hughes' third quarter of 2026 is the first to include Chart Industries, the cryogenic-equipment maker it bought for cash on July 16. Revenue rose 14% to $8.03 billion, but almost all of that growth was Chart: without Chart's $888 million, revenue was up about 2%. GAAP (official accounting) earnings went the other way — net income attributable to Baker Hughes fell 33% to $411 million and diluted EPS fell to $0.41 from $0.61 — because the deal brought $158 million of transaction costs, $143 million of amortization on Chart's acquired intangible assets and a tripling of interest expense. Orders were the strong part: $10.8 billion in total, with the Industrial & Energy Technology (IET) segment booking $5.9 billion, up 42%.

Results in figures

Baker Hughes does not report an operating-income line; we computed it as revenue minus cost of revenue, SG&A, R&D, restructuring and amortization of acquired intangibles. Operating margin is the share of revenue left after running the business, before interest, tax and one-off "other" items. Adjusted EBITDA is the company's measure of earnings before interest, tax, depreciation and amortization, also excluding items it treats as one-off.

Segments: three businesses now, not two

IET (gas turbines, compressors and LNG equipment, plus their servicing) grew revenue only 3%, but its order intake was the second-largest in its history. Climate Technology Solutions orders jumped to $804 million from $253 million, Gas Technology Equipment orders rose 43% to $3.12 billion and Gas Technology Services orders rose 26%. The release names a 1.1-gigawatt power-generation order (43 gas turbine packages) for "a major U.S. technology company" and a further ~500-megawatt order for data-center power, plus 13 compression systems for Venture Global's LNG feed-gas pipeline. On the revenue side, equipment sales fell 7% while service revenue rose 12%; Industrial Solutions revenue fell 29% because the Precision Sensors & Instrumentation business was sold. Segment EBITDA rose 8% to $685 million, which the company attributes to "price and higher volume, partially offset by a change in business mix and inflation."

OFSE (drilling, completions, production and subsea equipment for oil and gas producers) was flat year on year at $3.66 billion. Europe/CIS/Sub-Saharan Africa revenue rose 29% and Latin America 12%, while Middle East/Asia fell 13% — the company attributes that drop to the sale of its Surface Pressure Control business rather than lost work. North America slipped 3%. Sequentially the segment recovered: revenue up 6%, EBITDA up 9% to $659 million and margin up 0.5 points to 18.1%, on "higher volume and price." Subsea & Surface Pressure Systems orders rose 63% from Q2 to $1.09 billion.

Chart (cold boxes, cryogenic tanks, air coolers and Howden blowers) contributed $888 million of revenue and $156 million of EBITDA for about 11 weeks, with $3.6 billion of backlog. Its depreciation and amortization was $170 million, more than its EBITDA, so on a GAAP basis Chart lost money for Baker Hughes this quarter before even counting the interest on the debt that paid for it.

What the headline numbers hide

• Revenue growth was bought, not grown. Of the $1,015 million revenue increase, $888 million was Chart. The two existing segments together grew about 2%, and part of the base shrank because of the PSI and SPC disposals. Segment EBITDA excluding Chart rose 2.9% ($1,344 million vs $1,306 million).
• The GAAP-vs-adjusted gap is $0.29 per share, and most of it is genuinely one-off. Adjusted net income ($695 million) excludes, before tax: $158 million of transaction costs, $143 million of Chart intangible amortization, a $25 million inventory step-up charge (an accounting write-up of Chart's inventory to fair value that hits cost of sales once as it is sold), $28 million of restructuring and $17 million of other items, less $81 million of related tax. The transaction costs and step-up will not repeat; the $143 million of amortization will recur every quarter for years, but it is a non-cash charge that does not reflect how the business is running.
• What adjusted EPS does not exclude is the interest bill. Net interest expense was $177 million, versus $66 million in Q2 and $56 million a year ago. Long-term debt is $17.5 billion against $5.4 billion at the end of 2025, and cash has fallen to $4.1 billion from $15.7 billion at June 30 after $14.15 billion was paid for Chart. That higher interest roughly cancels out Chart's EBITDA contribution, which is why adjusted EPS rose only 3% despite a 14% rise in adjusted EBITDA.
• The tax rate helped. The GAAP effective tax rate was 18.7% ($97 million on $519 million of pre-tax income) versus 24.8% a year earlier, helped by a $244 million deferred tax benefit; without that, GAAP EPS would have fallen further.
• Cash conversion was strong. Operating cash flow of $1,005 million was 2.4 times net income of $422 million (D&A of $505 million is non-cash), and free cash flow rose 10% to $769 million.
• No buybacks. The company repurchased no shares in the first nine months of 2026 (vs $384 million in the same period of 2025) as cash went to Chart; it paid $228 million of dividends ($0.23 a share). Diluted shares rose 0.6% to 998 million, so share count did nothing for EPS.
• Balance-sheet growth is mostly acquisition. Receivables ($7.9 billion vs $6.6 billion at year-end) and inventory ($6.0 billion vs $5.0 billion) both rose, but Chart's arrival makes those comparisons meaningless this quarter.

On balance the quarter is understated: GAAP EPS fell 33%, but about $211 million of pre-tax charges ($158 million of deal costs, $28 million of restructuring and the $25 million inventory step-up) will not recur, and adjusted EPS — which already carries the new interest bill — rose 3%.

Did last time's read hold up?

Our Q2 2026 report said Q3 would be "the first real test of the combined company," that Chart's "integration and financing costs … will show up as higher interest and amortization from Q3," that we should "expect sharply lower cash and higher debt," and that OFSE should improve if Middle East activity kept recovering. All of that happened: interest rose to $177 million from $66 million, amortization of acquired intangibles jumped to $165 million from $10 million a year ago, and cash fell from $15.7 billion to $4.1 billion. OFSE did improve sequentially (revenue +6%, margin 17.5% → 18.1%), with Middle East/Asia revenue up 3% from Q2. The one point that went less well is IET's margin, which slipped to 19.7% from Q2's 20.6% — still 0.9 points above a year ago.

Takeaway: Strip out Chart and the deal costs, and Baker Hughes' existing business barely grew this quarter — revenue +2%, segment EBITDA +3%. The case for the stock now rests on the backlog: IET booked $1.70 of orders for every $1 it billed, and total RPO is $46.4 billion. The test from here is whether Chart's earnings can outgrow its new $121 million-a-quarter increase in interest cost.

Outlook

The release does not give revenue or EPS guidance. Management says it is raising its full-year 2026 IET order guidance (the new figure is not stated in the release) and lifting its "Horizon 2" (2026–2028) IET order outlook to "$50 billion plus," up from more than $45 billion in July. CEO Lorenzo Simonelli points to demand from "data centers, space, LNG and gas infrastructure" for IET, and for OFSE to "growing momentum across international markets led by a meaningful improvement in the Middle East." The release also flags the Strait of Hormuz conflict as a continuing risk. A conference call is scheduled for October 28, 2026; the full 10-Q, with management's discussion and analysis, has not yet been filed.

Our read: IET's order book makes its revenue path for 2027–2028 unusually visible, and a record quarter for compressor-upgrade orders points to growing aftermarket income. The near-term question is earnings, not demand: Chart has to lift its EBITDA well above $156 million a quarter (it had only part of the quarter here) to carry the interest on $17.5 billion of long-term debt, and buybacks are likely to stay at zero while that debt comes down. Watch for Chart synergy figures on the call, and whether IET's margin recovers above 20% in Q4.

Source: Baker Hughes Q3 2026 earnings release (Exhibit 99.1 to the Form 8-K filed October 27, 2026). The full Form 10-Q had not been filed when this analysis was written, so MD&A detail beyond the release is not included.