Report date: Monday, July 27, 2026 (results released after market close July 26; call 9:30am ET July 27)
This is arguably the most consequential print of Baker Hughes' multi-year transformation. The quarter itself (April–June) predates the close of the Chart Industries acquisition (completed July 16, 2026, after Q2 ended), so tomorrow's numbers are still "legacy" two-segment BKR (OFSE + IET). But management will almost certainly use the call to lay out pro forma FY2026 guidance including Chart as a new third reporting segment, financing/leverage detail, and integration milestones — which is likely to matter more to the stock than the Q2 print itself.
Quick facts on the deal, now closed: - All-cash purchase at $210/share, ~$13.6B enterprise value, funded with cash on hand plus $6.5B USD and €3.0B of March 2026 senior notes and $2.0B of new senior unsecured term loans (two $1.0B facilities), while terminating $2.6B of unused bridge commitments. - Chart becomes a standalone segment (air/gas handling, thermal management, lifecycle services) led by Jim Apostolides; it generated $4.3 billion of revenue in fiscal 2025. - Company reiterates $325 million of annualized cost synergies within three years, with additional commercial-synergy upside, and a net leverage target of 1.0–1.5x within 24 months of close.
Q1 2026 was very strong on paper: first quarter, adjusted EBITDA totaled $1.16 billion, exceeding our guidance range as we continue to deepen our exposure into adjacent end markets and drive structural operational efficiency, with Adjusted earnings per share were $0.58, 13% above the same quarter last year, even as results were impacted from the Middle East conflict. IET was the standout: IET delivered another outstanding quarter with bookings reaching a record of $4.9 billion, marking the third consecutive quarter above $4 billion, resulting in a book-to-bill of 1.5x for the quarter, resulting in a record RPO of $33.1 billion.
Critically, management's Q2 and full-year guidance was built on an explicit assumption that the Middle East conflict would persist only through the end of June, with the Strait of Hormuz fully reopening thereafter and a "measured" H2 recovery in OFSE activity. On the Q1 call, CFO Ahmed Moghal guided to Q2 company revenue of $6.5B and adjusted EBITDA of $1.13B, with IET EBITDA of $670M and OFSE EBITDA of $540M on $3.2B of revenue, and flagged that OFSE Middle East revenue could fall "more than 20% sequentially" in Q2 before a second-half recovery. Full-year guidance assumed IET EBITDA of at least the $2.7B midpoint and OFSE EBITDA at the low end of $2.325 billion, contingent on that mid-year resolution.
That assumption did not hold. News flow through July shows the conflict escalating rather than resolving: Brent crude settled above $100/barrel for the first time since May after Houthi strikes on Saudi tankers opened a second chokepoint (Bab al-Mandeb) alongside ongoing Strait of Hormuz disruption, and as of July 26 the U.S. had only just paused strikes on Iran after 13 consecutive days of bombing, with talks still fragile. This is the single most important variable for tomorrow's print and guide: - Bull case: BKR's OFSE book proved resilient (as it did in Q1), sustained high oil/LNG prices support upstream reinvestment, and any actual Q2 shortfall vs. the June-resolution assumption is already priced in given the ~20% stock pullback since April highs. - Bear case: continued/escalating disruption means OFSE likely missed its $540M EBITDA/$3.2B revenue guide for Q2, and full-year OFSE guidance (already only "low end" contingent) gets cut further, alongside commentary on shipping/logistics delays hitting IET's equipment deliveries.
Investors should listen closely for: (1) whether Middle East OFSE revenue stabilized or fell further than the ~20% sequential decline management modeled; (2) any change to the full-year OFSE EBITDA range; (3) commentary on IET logistics/shipping delays tied to regional disruption; and (4) whether elevated oil/LNG prices are translating into incremental upstream or LNG-infrastructure order activity (a potential offset).
IET remains the core bull thesis. In Q1, segment EBITDA grew 35% y/y to $678 million on margins of 20.2%, driven by strong pricing and continued productivity improvements, and management struck a notably bullish long-term tone: we are increasingly confident that our Horizon 2 IET order target will exceed $40 billion, supported by strengthening demand across global energy infrastructure markets. Power Systems — tied to data-center and grid-power demand — was a highlight, with $1.4 billion in Power Systems orders in Q1 and management noting Baker Hughes is effectively sold out of NovaLTs through 2028 given tightness across the turbine market.
For Q2, watch: - Whether IET orders sustain the >$4B/quarter run rate (three straight quarters above that level heading into Q1) and RPO continues climbing off the record $33.1B base. - LNG order flow (QatarEnergy North Field West awards booked in Q1) and any new FIDs, especially in North America, where management flagged potential acceleration of LNG project FIDs in North America. - First commentary on how Chart will be integrated into segment reporting — expect a walk-through of the new three-segment structure (OFSE / IET / Chart), pro forma revenue/EBITDA contribution for H2 2026, and updated synergy/integration cost detail now that the deal has actually closed (management had already identified more than 250 synergy opportunities during pre-close planning).
Baker Hughes entered the Chart close from a position of strength: the company's balance sheet remains strong with our net debt to adjusted EBITDA ratio declining to 0.32x, and cash had swelled to $14.8 billion, while liquidity increased to $17.8 billion following a $6.5B USD / €3.0B European bond offering explicitly earmarked to fund the deal. Management also front-loaded portfolio management to offset the incremental leverage: divestitures of PSI (to Crane), the SPC/Cactus JV, the HMH IPO and the Waygate Technologies sale to Hexagon were expected to generate gross proceeds of approximately $3 billion in 2026, further strengthening our balance sheet.
Now that Chart has actually closed and been funded with the bonds plus $2.0 billion of new term loans, expect the Q2 print to show a step-up in gross debt on the balance sheet and the first disclosure of post-close pro forma leverage. Key questions: progress toward the 1.0–1.5x net leverage target within 24 months, any update to buyback/dividend cadence (dividend has been steady at $0.23/share; buybacks were modest even before the deal), and whether further divestitures are planned beyond the ~$3B already generated in 2026, especially since management noted its near-term focus is "very much on closing and successfully integrating the Chart transaction" rather than additional portfolio moves.
BKR heads into Q2 having just closed its largest-ever acquisition, transforming the story from a "two-segment oilfield-services-plus-energy-infrastructure" company into a three-segment industrial/energy technology platform with Chart's thermal-management and lifecycle-services business bolted onto IET's already-record backlog. The near-term numbers are clouded by a Middle East conflict that has escalated rather than resolved as management's Q2 guidance assumed, creating real risk to the OFSE segment and to full-year guidance. But the stock's roughly 20% retreat from April highs, combined with a Street price target still well above the current quote, suggests the market may already be discounting a good deal of near-term OFSE disappointment. The more important through-line for long-term investors is likely to be management's first detailed look at pro forma financials with Chart consolidated, the credibility of the $325M synergy target and 1.0–1.5x leverage path, and whether IET's order momentum (and the >$40B Horizon-2 target) remains intact despite the noisy macro backdrop.