Baker Hughes Lifts Its Horizon 2 Equipment Order Target To More Than $50 Billion
CEO Lorenzo Simonelli says the goal is up $10 billion in a year and does not rely on space, geothermal or Middle East rebuilding.
Baker Hughes now expects its industrial and energy technology segment to book more than $50 billion of orders over Horizon 2, Chairman and CEO Lorenzo Simonelli said on the company's third-quarter earnings call. The energy technology company, which sells turbines, compressors and oilfield equipment and services, says the target needs no help from emerging markets.
A target that grew $10 billion
Answering a question from a Citi analyst, Simonelli said the Horizon 2 order target is up $10 billion since the company introduced it about a year ago. He said it "doesn't depend on emerging opportunities, such as space, geothermal, or further energy infrastructure investments in the Middle East," which he called potential upside.
He named two major contributors. Power systems orders could approach $15 billion across Horizon 2, and LNG equipment orders could again approach $10 billion, he said, because project final investment decisions have accelerated beyond expectations. LNG orders in the first period, Horizon 1, were $10 billion.
Data centers have brought in $4.9 billion of orders so far this year, up approximately 500% from a year earlier, Simonelli said. Orders outside data centers totaled approximately $13 billion. He also cited a pipeline of more than $10 billion in enterprise opportunities, excluding Chart.
Record backlog, raised 2026 outlook
The segment booked $5.9 billion of orders in the quarter, a book-to-bill ratio of 1.7 times (orders relative to revenue). Remaining performance obligations, the contracted work still to be delivered, hit a record $39.4 billion, up 23% from a year earlier and 6% from the prior quarter.
With about $18 billion booked through nine months, the company now expects full-year segment orders of $21.5 billion to $23.5 billion. CFO Ahmed Moghal said that would be a record year and expects book-to-bill above one times in 2027.
Fourth-quarter guidance and slower 2027 revenue
For the fourth quarter, Moghal guided to $3.55 billion of segment revenue and $715 million of EBITDA, assuming about one month of contribution from Waygate, a business the company plans to divest. Companywide, he guided to $8.25 billion of revenue and $1.46 billion of adjusted EBITDA.
Longer-lead-time orders in power systems, LNG and offshore production stretch out revenue conversion. Moghal said that means more modest growth in 2027. For the segment he sees organic revenue growth in the low to mid single digits.
Simonelli also said contracts carry material non-refundable down payments and meaningful cancellation penalties, and that the company sees no broad project attrition. Power systems is less than 20% of total company remaining obligations, he said.
Moghal said 33% of the combined gas turbine and compression backlog is scheduled to convert in 2027.
Sources
- Baker Hughes Logs Higher 3Q Revenue on Growing Demand From Energy, Industrial Markets -- Update — MarketWatch
- Baker Hughes (BKR) Q3 Earnings and Revenues Surpass Estimates — Yahoo Finance
- Baker Hughes Q3 Profit Falls 33% as Orders Surge 31% | OilPrice.com — oilprice.com
- Baker Hughes Revenue Lifted by Growing Demand From Energy, Industrial Markets - WSJ — The Wall Street Journal
- Baker Hughes Non-GAAP EPS of $0.70 beats by $0.09, revenue of $8.03B beats by $280M (NASDAQ:BKR) | Seeking Alpha — seekingalpha.com
