Baker Hughes Co. 2025 Annual Report (10-K) Summary
Business Context and Reporting Period
This summary covers the fiscal year ended December 31, 2025, for Baker Hughes Company (BKR), a global energy technology company. The Company operates through two primary segments: Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET). The reporting period reflects a strategic focus on transforming the core business, driving profitable growth in LNG and data center markets, and expanding new energy solutions (hydrogen, CCUS, geothermal). The Company employs approximately 56,000 people across over 120 countries.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $27.7 billion | $27.8 billion | -$0.1 billion (-0.3%) |
| Net Income | $2.6 billion | $3.0 billion | -$0.4 billion (-13%) |
| Diluted EPS | $2.60 | $2.98 | -$0.38 |
| Operating Cash Flow | $3.8 billion | $3.3 billion | +$0.5 billion |
| Free Cash Flow | $2.5 billion | $2.1 billion | +$0.4 billion |
| Segment EBITDA (Total) | $5.1 billion | $4.9 billion | +$0.2 billion |
| Orders Recognized | $29.6 billion | $28.2 billion | +$1.4 billion |
| Remaining Performance Obligations (RPO) | $35.9 billion | $33.0 billion (est.) | +$2.9 billion |
| Cash and Equivalents | $3.7 billion | $3.4 billion | +$0.3 billion |
| Total Debt | $6.1 billion | $6.0 billion | +$0.1 billion |
Note: Free Cash Flow calculated as Operating Cash Flow ($3.81B) less Capital Expenditures ($1.27B).
Material Changes vs. Prior Period
- Revenue Mix Shift: While total revenue remained flat, the IET segment grew 10% ($13.4 billion) driven by strong demand in Gas Technology Equipment and Services. Conversely, OFSE revenue declined 8% ($14.3 billion) due to reduced global upstream capital spending and lower rig counts.
- Profitability Drivers: Net income decreased primarily due to a $103 million net loss from the change in fair value of equity securities (compared to a $367 million gain in 2024), transaction costs, and lower volume in OFSE. These were partially offset by cost-out initiatives and productivity gains.
- Orders Growth: Total orders increased to $29.6 billion, with IET orders rising significantly ($14.9 billion) and OFSE orders declining ($14.7 billion). Notably, the Company booked $1 billion in data center-related orders in 2025, with expectations to reach $3 billion by 2027.
- Portfolio Actions: The Company completed the acquisition of Continental Disc Corporation (CDC) in August 2025. It also announced the sale of its Precision Sensors & Instrumentation (PSI) business to Crane Company and the creation of a joint venture for its Surface Pressure Control business with Cactus, Inc., both closing on January 1, 2026.
Guidance, Outlook, and Risks
- 2026 Outlook: Management forecasts modest declines in global upstream spending for 2026 due to oil price uncertainty and OPEC+ supply dynamics. However, the IET outlook remains strong, supported by LNG demand, gas infrastructure, and data center expansion.
- Chart Industries Acquisition: The Company agreed to acquire Chart Industries for $210 per share (approx. $13.6 billion enterprise value). Closing is expected in Q2 2026, subject to regulatory approvals. Financing includes a $14.9 billion bridge facility and a $2.6 billion delayed-draw term loan.
- Capital Allocation: The Company returned $1.3 billion to shareholders in 2025 via dividends and share repurchases. The quarterly dividend was increased to $0.23 per share. Capital expenditures for 2026 are estimated at up to 5% of annual revenue.
- Key Risks:
- Geopolitical & Trade: Ongoing tensions (Russia/Ukraine, Middle East) and potential tariff increases could disrupt supply chains and impact customer spending.
- Energy Transition Uncertainty: A potential slowdown in the transition to lower-carbon energy could affect demand for new energy technologies.
- Customer Credit: Concentration of receivables in the energy sector exposes the Company to customer financial distress if commodity prices decline.
- Cybersecurity: Increasing sophistication of cyber-attacks poses risks to operations and data integrity.
Investor Verification Checklist
- Chart Acquisition Status: Monitor regulatory approval progress and potential delays for the Q2 2026 closing of the Chart Industries acquisition.
- OFSE Volume Trends: Verify if the decline in OFSE revenue stabilizes in 2026 as excess oil supply moderates and rig counts potentially recover.
- Data Center Execution: Track the realization of the projected $3 billion in data center orders between 2025 and 2027.
- Divestiture Proceeds: Confirm the final proceeds and accounting treatment for the PSI and Surface Pressure Control divestitures closing in early 2026.
- Equity Security Volatility: Assess the impact of mark-to-market adjustments on equity securities on future earnings, given the significant swing from 2024 gains to 2025 losses.
- Debt Covenants: Review compliance with debt covenants following the incurrence of new debt facilities for the Chart acquisition.