Event: Monday, July 27, 2026
Focus: The quarter itself matters, but the investment debate will center on whether the deteriorated Middle East operating backdrop forces a reset to 2H26 expectations—and whether IET’s infrastructure, LNG, and power-systems momentum can continue to offset OFSE disruption.
Baker Hughes enters 2Q with two sharply different businesses:
Management’s 2Q guide implied a largely flat sequential consolidated quarter, with IET strength nearly offsetting OFSE pressure. The main risk is that investors will look through an in-line 2Q result and focus on whether the company can still support the prior assumption of a measured Middle East recovery in the second half.
At 1Q earnings, Baker Hughes guided to approximately:
| $ in billions, except margin | 2Q26 guide | 1Q26 actual | 2Q25 actual |
|---|---|---|---|
| Revenue | $6.5 | $6.6 | $6.9 |
| Adjusted EBITDA | $1.13 | $1.16 | $1.21 |
| IET revenue | ~$3.3 | $3.35 | $3.29 |
| IET EBITDA | $0.67 | $0.68 | $0.59 |
| OFSE revenue | $3.2 | $3.24 | $3.62 |
| OFSE EBITDA | $0.54 | $0.57 | $0.68 |
The guide implies roughly 6% year-over-year revenue decline and 7% adjusted EBITDA decline, but underneath that is a favorable mix shift: IET EBITDA was expected to rise about 15% year over year, while OFSE EBITDA was expected to decline roughly 20%.
A simple meet on the aggregate guidance would be acceptable, but not necessarily sufficient. The market is likely to scrutinize:
In April, Baker Hughes’ outlook assumed that the Middle East conflict would persist through the end of June, followed by reopening of the Strait of Hormuz and a measured regional recovery in the second half. That assumption is clearly under pressure: the conflict and shipping disruptions continued through July, including renewed uncertainty around Hormuz and Red Sea routes.
This matters less for reported 2Q results—which were already expected to absorb disruption—and much more for the full-year bridge. Management previously said it could reach:
Based on 1Q actuals and 2Q guidance, reaching those thresholds requires approximately $1.35 billion of IET EBITDA and $1.22 billion of OFSE EBITDA in 2H26.
IET has the backlog and demand visibility to support its portion of that bridge. OFSE is more exposed to the timing of logistics normalization, customer activity, export flows, and the pace at which deferred intervention and remediation work returns.
IET is increasingly the company’s differentiator. In 1Q, it delivered:
The order story was broad rather than reliant on a single LNG award: power systems contributed $1.4 billion of orders, while the company also cited strength in LNG, gas infrastructure, carbon capture, grid stability, and data-center-related power demand.
For this report, investors should pay closest attention to:
The structural argument is compelling: energy security, LNG infrastructure, power scarcity, grid reliability, and data-center electricity demand all support IET’s addressable market. However, the near-term question is whether project timing and logistics defer revenue rather than destroy demand.
OFSE entered 2026 with already-soft activity conditions, then absorbed both the Surface Pressure Control divestiture and Middle East disruption. In 1Q:
For 2Q, management anticipated a more than 20% sequential decline in Middle East activity and expected regional product sales to be more affected than services because of import/export logistics.
What could surprise positively: stronger activity outside the Middle East, continued subsea backlog execution, favorable offshore mix, and early signs that deferred remediation, intervention, or production-optimization work will snap back once export infrastructure normalizes.
What could disappoint: a larger-than-anticipated Middle East revenue shortfall, supply-chain costs, delayed equipment movements, or a full-year OFSE outlook that no longer embeds a meaningful 2H recovery.
Baker Hughes completed its acquisition of Chart Industries on July 16, after the June 30 quarter-end. Accordingly, Chart should not materially affect reported 2Q operating results, but it will likely dominate strategic discussion.
Key points to watch:
The earnings call should provide the first meaningful post-close commentary on integration priorities, purchase-accounting effects, expected reporting structure, synergy timing, financing costs, and the potential for commercial cross-selling across LNG, industrial gas, nuclear, data centers, carbon capture, and thermal-management markets.
The strategic rationale is attractive, but execution risk is now real: investors will want evidence that integration can proceed without diluting the IET margin and cash-flow story.
Free cash flow was weak in 1Q at $210 million, partly reflecting normal first-quarter seasonality and delayed customer payments. A sequential improvement in 2Q would be important, but the bigger balance-sheet topic is Chart financing.
Before the acquisition, Baker Hughes had raised substantial debt and held $14.8 billion of cash at March 31. The company also completed/announced several portfolio actions—including PSI, SPC, HMH, and Waygate—that were expected to generate roughly $3 billion of gross 2026 proceeds.
Investors should focus on:
BKR closed at $57.27 on Friday, July 24, down about 11% from its April 23 close following 1Q results, though it recovered roughly 6% from its July 1 low.
That performance suggests investors have already discounted meaningful macro and Middle East risk. Therefore, the setup may be more sensitive to the direction of revised forward guidance than to a modest 2Q earnings variance:
BKR remains a portfolio-transformation story with a near-term geopolitical earnings overhang. The company’s IET franchise is doing what investors hoped: producing high-margin growth, building record backlog, and gaining exposure to durable infrastructure and power markets. But the OFSE recovery embedded in prior 2026 expectations is now uncertain, while Chart adds both strategic upside and integration/leverage complexity.
For Monday’s report, the most important message is likely not “did BKR hit $1.13 billion of 2Q EBITDA?” It is: how much of the 2026 earnings bridge still depends on a Middle East normalization that has not yet occurred?
Sources: Baker Hughes 1Q26 earnings release and call transcript; Baker Hughes 2Q25 earnings release; Baker Hughes 4Q25/full-year 2025 earnings release; Baker Hughes July 16, 2026 Chart acquisition announcement; company and market-news data through July 26, 2026.