Baker Hughes Co

Previous wording

In the first quarter of 2025, we saw a weakening macroeconomic environment and slowing activity in the oil markets primarily due to the ongoing geopolitical tensions, uncertainty around trade policy and tariffs and slower global economic growth.

Current wording

In the second quarter of 2025, we saw slowing activity across global oil markets primarily due to the ongoing geopolitical tensions, uncertainty around trade policy and tariffs, and slower global economic growth.

Previous wording

We see several supply and demand factors driving downward pressure on oil prices, including the impact from announced plans for increased production by the Organization of the Petroleum Exporting Countries and its allies ("OPEC+") and uncertainty around trade policy and tariffs affecting global GDP and oil demand. Based on the current macroeconomic and geopolitical framework, we expect 2025 global upstream spending to be lower than 2024 with pockets of resilience in key international markets. We maintain our expectation for producers to shift spending towards the optimization of mature fields.

Current wording

As we look to the rest of 2025, we remain positive on the global liquefied natural gas ("LNG") and natural gas outlook, while we see continued volatility in oil markets as weakening demand and rising production are balanced against persistent geopolitical risks in both the Middle East and Russia. We anticipate oil-related upstream spending will remain subdued until the Organization of the Petroleum Exporting Countries and its allies ("OPEC+") excess barrels are absorbed by the market. Based on the current macroeconomic and geopolitical backdrop, we expect 2025 global upstream spending to be lower than 2024, with pockets of resilience in select international markets. We maintain our expectation for producers to shift spending towards the optimization of mature fields.

Previous wording

We remain optimistic on the global natural gas outlook, as we see a continued shift towards the development of natural gas and liquefied natural gas ("LNG"). We believe the positive long-term fundamentals for natural gas are less affected by near-term volatility and supported by solid growth in natural gas demand, positive fundamentals for LNG contracting and the continued desire to decarbonize the energy ecosystem.

Current wording

We remain optimistic on the global natural gas outlook, as we see a continued shift towards the development of natural gas and LNG. We believe the positive long-term fundamentals for global natural gas are less affected by near-term macro uncertainty and supported by solid growth in demand, positive fundamentals for LNG contracting and the continued desire to reduce emissions across the energy ecosystem.

Previous wording

We will continue to monitor market conditions and assess potential risks, including uncertainty around the macroeconomic environment, trade policy and tariffs, oil price volatility and changes in regulations and tax or other incentives for new energy solutions. Furthermore, in IET, we will continue to manage the tightness in the aeroderivative supply chain.

Current wording

We will continue to monitor market conditions and assess potential risks, including uncertainty around the macroeconomic environment, trade policy and tariffs, the pace of OPEC+ restarted idled oil production, oil price volatility, changes in regulations and tax or other incentives for new energy solutions.

Previous wording

In the first quarter of 2025, the Company generated revenues of $6.4 billion, an increase of $9 million compared to the first quarter of 2024. IET revenue increased $0.3 billion, driven by Gas Technology Equipment ("GTE") and Climate Technology Solutions ("CTS") revenue. OFSE revenue decreased $0.3 billion with a decrease in international and North America revenue. Net income was $0.4 billion compared to $0.5 billion in the first quarter of 2024, decreasing $0.1 billion. The decrease to net income was as a result of losses in the fair value of certain equity securities compared to gains in the same period last year, partially offset by increased volume in IET and higher margins across both segments.

Current wording

In the second quarter of 2025, the Company generated revenues of $6.9 billion, a decrease of $0.2 billion compared to the second quarter of 2024. IET revenue increased $0.2 billion, driven by Gas Technology Equipment ("GTE"), Gas Technology Services ("GTS"), and Climate Technology Solutions ("CTS") revenue. OFSE revenue decreased $0.4 billion with a decrease in international and North America revenue. Net income was $0.7 billion, an increase of $0.1 billion compared to the second quarter of 2024. The increase to net income was a result of higher EBITDA margin in both segments, gains in the fair value of certain equity securities, and to a lesser extent FX, partially offset by lower volume in OFSE.

Previous wording

As part of our journey of transformation, we continued to undertake significant structural changes. We have progressed on our efforts to improve efficiencies and modernize how the business operates, and those benefits have translated into higher margin performance.

Current wording

As part of our journey of transformation, we continued to undertake significant structural changes. We have progressed on our efforts to improve efficiencies and modernize how the business operates, and those benefits have resulted in improved profitability.

Previous wording

Baker Hughes remains committed to a flexible capital allocation policy that balances returning cash to shareholders and investing in growth opportunities. We increased our quarterly dividend in the first quarter of 2025 by two cents to $0.23 per share. In the first quarter of 2025, we returned a total of $417 million to shareholders in the form of dividends and share repurchases.

Current wording

Baker Hughes remains committed to a flexible capital allocation policy that balances returning cash to shareholders and investing in growth opportunities. We increased our quarterly dividend in the first quarter of 2025 by two cents to $0.23 per share. In the second quarter of 2025, we returned a total of $423 million to shareholders in the form of dividends and share repurchases.

Previous wording

•OFSE North America activity: In 2025, we expect a second consecutive year of lower Exploration and Production ("E&P") spending due to recent commodity price weakness.

Current wording

•OFSE outlook: In 2025, we expect a second consecutive year of lower Exploration and Production ("E&P") spending in North America due to recent commodity price weakness. We expect International activity to be at lower levels in 2025 compared to 2024.

Previous wording

•IET outlook: We see continued resilience in LNG, Floating Production Storage and Offloading ("FPSO"), and gas infrastructure, as well as increasing opportunities to leverage our versatile portfolio to enhance IET's position across industrial and distributed power markets.

Current wording

•IET outlook: We see continued strength in LNG and gas infrastructure, as well as increasing opportunities to leverage our versatile portfolio to enhance IET's position across industrial and distributed power markets, with a growing emphasis on data centers.

Previous wording

We also expect to see continued growth in new energy solutions specifically focused around reducing carbon emissions of the energy and broader industry, including: hydrogen; geothermal; carbon capture, utilization and storage; energy storage; clean power; and emissions abatement solutions.

Current wording

We also expect to see continued growth in new energy solutions specifically focused around reducing carbon emissions for the energy and broader industrial sectors. These include hydrogen; geothermal; carbon capture, utilization and storage; energy storage; clean power; and emissions abatement solutions.

Previous wording

Overall, we believe our portfolio is well positioned to compete across the energy value chain and deliver comprehensive solutions for our customers. Over time, we believe the world's demand for energy will continue to rise, and that hydrocarbons will play a major role in meeting the world's energy needs for the foreseeable future. As such, we remain focused on delivering innovative, low-emission, and cost-effective solutions that deliver step changes in operating and economic performance for our customers.

Current wording

Overall, we believe our portfolio is uniquely positioned to compete across the energy value chain and deliver integrated, high-impact solutions for our customers. Over time, we believe global energy demand will continue to rise, supported by durable, secular macroeconomic trends, with hydrocarbons continuing to play a fundamental role in meeting the world's energy needs. As such, we remain focused on delivering innovative, lower-emission, and cost-effective solutions that drive meaningful improvements in operational and financial performance for our customers.

Previous wording

We believe we have an important role to play in society as an industry leader and partner. We view the area of environmental, social, and governance as a lever to transform the performance of our Company. In 2019, we made a commitment to reduce Scope 1 and 2 carbon dioxide equivalent emissions from our operations by 50% by 2030 and achieve net-zero emissions by 2050. We continue to make progress on emissions reductions, and reported in our 2023 Corporate Sustainability Report a 28.3% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions as compared to our 2019 base year.

Current wording

We believe we have an important role to play in society as an industry leader and partner. We view the area of sustainability as a lever to transform the performance of our Company. In 2019, we made a commitment to reduce Scope 1 and 2 carbon dioxide equivalent emissions from our operations by 50% by 2030 and achieve net-zero emissions by 2050. We continue to make progress on emissions reductions, and reported in our 2024 Corporate Sustainability Report a 29.3% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions as compared to our 2019 base year.

Previous wording

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition, and liquidity position as of and for the three months ended March 31, 2025 and 2024, and should be read in conjunction with our condensed consolidated financial statements and related notes.

Current wording

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition, and liquidity position as of and for the three and six months ended June 30, 2025 and 2024, and should be read in conjunction with our condensed consolidated financial statements and related notes.

Previous wording

Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of each segment isevaluated based onsegment Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA"), which is defined as income (loss) before income taxes and before the following: net interest expense, costs associated with significant restructuring programs, depreciation and amortization, and unallocated corporate costs and other income (expense).

Current wording

Our results of operations are evaluated by our chief operating decision maker, who is the Company's Chief Executive Officer, on a consolidated basis as well as at the segment level. The performance of each segment isevaluated based onsegment Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA"), which is defined as income (loss) before income taxes and before the following: net interest expense, costs associated with significant restructuring programs, depreciation and amortization, and unallocated corporate costs and other income (expense).

Previous wording

(1)For the three months ended March 31, 2025 and 2024, total new energy orders incorporates CTS in IET.

Current wording

(1)For the three and six months ended June 30, 2025 and 2024, total new energy orders incorporates CTS in IET.

Previous wording

The Remaining Performance Obligations ("RPO") relate to the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations. As of March 31, 2025, RPO totaled $33.2 billion, of which OFSE totaled $2.8 billion, and IET totaled $30.4 billion.

Current wording

The Remaining Performance Obligations ("RPO") relate to the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations. As of June 30, 2025, RPO totaled $34 billion, of which OFSE totaled $2.7 billion, and IET totaled $31.3 billion.

Previous wording

Selling, general and administrative cost decreased $41 million, or 7%, to $577 million driven primarily by a continued focus on cost optimization, partially offset by inflationary pressure.

Current wording

Selling, general and administrative cost decreased $75 million, or 12%, to $567 million driven primarily by a continued focus on cost optimization, partially offset by inflationary pressure.

Previous wording

Net interest expense incurred in the first quarter of 2025 was $51 million, which includes interest income of $20 million. Net interest expense increased $10 million compared to the first quarter of 2024, with lower interest income primarily driven by lower interest rates.

Current wording

Net interest expense incurred in the second quarter of 2025 was $54 million, which includes interest income of $19 million. Net interest expense increased $7 million compared to the second quarter of 2024, with lower interest income primarily driven by lower interest rates.

Previous wording

We recorded income taxes in the first quarter of 2025 and 2024 of $152 million and $178 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is primarily related to income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances. Further, for the period ending March 31, 2024, this impact is partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances.

Current wording

We recorded income taxes in the second quarter of 2025 and 2024 of $256 million and $243 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is primarily related to income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances. Further, for the period ending June 30, 2024, this impact is partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances, which were subsequently released later in 2024.

Previous wording

OFSE revenue of$3,499 million decreased $285 million in the first quarter of 2025 compared to the first quarter of 2024, driven by lower international and domestic rig count. From a geographical perspective, international revenue was $2,577 million, a decrease of $216 million from the first quarter of 2024, driven by the Europe/CIS/Sub-Saharan Africa regions and Latin America partially offset by the Middle East/Asia region. North America revenue was $922 million in the first quarter of 2025, a decrease of $68 million from the first quarter of 2024.

Current wording

OFSE revenue of$3,617 million decreased $394 million in the second quarter of 2025 compared to the second quarter of 2024, driven by lower international and domestic rig count. From a geographical perspective, international revenue was $2,689 million, a decrease of $298 million from the second quarter of 2024, driven by all international regions. North America revenue was $928 million in the second quarter of 2025, a decrease of $96 million from the second quarter of 2024.

Previous wording

OFSE segment EBITDA was $623 million in the first quarter of 2025 compared to $644 million in the first quarter of 2024.The reduction of EBITDA in the first quarter of 2025 was a result of overall lower volume, FX, and changes in business mix, partially offset by price and cost out initiatives.

Current wording

OFSE segment EBITDA was $677 million in the second quarter of 2025 compared to $716 million in the second quarter of 2024. The reduction of EBITDA in the second quarter of 2025 was a result of overall lower volume, changes in business mix, and inflation, partially offset by overall productivity improvements, including cost out initiatives, and favorable price.

Previous wording

IET revenue of$2,928 million increased $294 million, or 11%, in the first quarter of 2025 compared to the first quarter of 2024. The increase was primarily in GTE and CTS, partially offset by Industrial Technology and GTS.

Current wording

IET revenue of$3,293 million increased $165 million, or 5%, in the second quarter of 2025 compared to the second quarter of 2024, with increases in GTE, GTS and CTS, partially offset by Industrial Technology.

Previous wording

Research and development cost decreased $18 million, or 11%, to $146 million, mainly related to timing of project spend within the year.

Current wording

Research and development cost decreased $15 million, or 5%, to $307 million, mainly related to timing of project spend within the year.

Previous wording

We recorded other (income) expense, net of $140 million in the first quarter of 2025, which included a net loss of $140 million from the change in fair value of equity securities. In the first quarter of 2024, we recorded $22 million of other income. Included in this amount was a net gain of $52 million from the change in fair value of equity securities.

Current wording

We recorded other expense of $6 million in the first six months of 2025, which included a net loss of $21 million from the change in fair value of equity securities. In the first six months of 2024, we recorded $48 million of other income. Included in this amount was a net gain of $71 million from the change in fair value of equity securities.

Previous wording

IET segment EBITDA was $501 million in the first quarter of 2025 compared to $386 million in the first quarter of 2024.The improved performance in the first quarter of 2025 was driven by higher volume primarily from higher proportionate growth in GTE, price, and productivity, partially offset by inflationary pressure.

Current wording

IET segment EBITDA was $1,086 million in the first six months of 2025 compared to $883 million in the first six months of 2024. The improved performance in the first six months of 2025 was driven by higher volume primarily from higher proportionate growth in GTE, productivity, price, and cost out initiatives, partially offset by inflationary pressure.

Previous wording

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and financial flexibility in order to fund the requirements of our business. We continue to maintain solid financial strength and sufficient liquidity. At March 31, 2025, we had cash and cash equivalents of $3.3 billion compared to $3.4 billion at December 31, 2024.

Current wording

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and financial flexibility in order to fund the requirements of our business. We continue to maintain solid financial strength and sufficient liquidity. At June 30, 2025, we had cash and cash equivalents of $3.1 billion compared to $3.4 billion at December 31, 2024.

Previous wording

In the U.S. we held cash and cash equivalents of approximately $0.8 billion and $0.6 billion and outside the U.S. of approximately $2.5 billion and $2.8 billion as of March 31, 2025 and December 31, 2024, respectively. A substantial portion of the cash held outside the U.S. at March 31, 2025 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

Current wording

In the U.S. we held cash and cash equivalents of approximately $0.5 billion and $0.6 billion and outside the U.S. of approximately $2.6 billion and $2.8 billion as of June 30, 2025 and December 31, 2024, respectively. A substantial portion of the cash held outside the U.S. at June 30, 2025 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

Previous wording

During the three months ended March 31, 2025, we dispersed cash to fund a variety of activities including certain working capital needs, capital expenditures, the payment of dividends, and repurchases of our common stock.

Current wording

During the six months ended June 30, 2025, we dispersed cash to fund a variety of activities including certain working capital needs, capital expenditures, the payment of dividends, and repurchases of our common stock.

Previous wording

Cash flows provided by (used in) each type of activity were as follows for the three months ended March 31:

Current wording

Cash flows provided by (used in) each type of activity were as follows for the six months ended June 30:

Previous wording

Cash flows provided by operating activities were $709 million and $784 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Cash flows provided by operating activities were $1,219 million and $1,132 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

For the three months ended March 31, 2025, net working capital cash generation was $218 million, mainly due to accounts receivable collections and contract assets partially offset by progress collections, accounts payable and inventory increase.

Current wording

For the six months ended June 30, 2025, net working capital cash generation was $98 million, mainly due to accounts receivable collections and contract assets, partially offset by progress collections, accounts payable payments, and inventory increase.

Previous wording

For the three months ended March 31, 2024, net working capital cash generation was $209 million, mainly due to accounts receivable, accounts payable, and progress collections on equipment contracts, partially offset by an increase in inventory due to growth of the business.

Current wording

For the six months ended June 30, 2024, net working capital cash usage was $36 million, mainly due to an increase in contract assets and inventory, partially offset by accounts payable increase.

Previous wording

Included in the cash flows from operating activities for the three months ended March 31, 2025 and 2024 were payments of $32 million and $75 million, respectively, made primarily for employee severance as a result of our restructuring activities.

Current wording

Included in the cash flows from operating activities for the six months ended June 30, 2025 and 2024 were payments of $67 million and $130 million, respectively, made primarily for employee severance as a result of our restructuring activities.

Previous wording

Cash flows used in investing activities were $310 million and $269 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Cash flows used in investing activities were $596 million and $530 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Our principal recurring investing activity is the funding of capital expenditures including property, plant and equipment ("PP&E") and software, to support and generate revenue from operations. Expenditures for capital assets were $300 million and $333 million for the three months ended March 31, 2025 and 2024, respectively, partially offset by cash flows from the disposal of PP&E of $45 million and $51 million for the three months ended March 31, 2025 and 2024, respectively. Proceeds from the disposal of assets were primarily related to OFSE equipment that was lost-in-hole, and PP&E no longer used in operations that was sold throughout the period.

Current wording

Our principal recurring investing activity is the funding of capital expenditures including property, plant and equipment ("PP&E") and software, to support and generate revenue from operations. Expenditures for capital assets were $601 million and $625 million for the six months ended June 30, 2025 and 2024, respectively, partially offset by cash flows from the disposal of PP&E of $74 million and $101 million for the six months ended June 30, 2025 and 2024, respectively. Proceeds from the disposal of assets were primarily related to OFSE equipment that was lost-in-hole, and PP&E no longer used in operations that was sold throughout the period.

Previous wording

Cash flows used in financing activities were $502 million and $427 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Cash flows used in financing activities were $945 million and $929 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

We increased our quarterly dividend during the three months ended March 31, 2025 and 2024 by two cents to $0.23 and one cent to $0.21 per share, respectively. We paid dividends of $229 million and $210 million to our Class A shareholders during the three months ended March 31, 2025 and 2024, respectively.

Current wording

We increased our quarterly dividend during the six months ended June 30, 2025 and 2024 by two cents to $0.23 and one cent to $0.21 per share, respectively. We paid dividends of $456 million and $419 million to our Class A shareholders during the six months ended June 30, 2025 and 2024, respectively.

Previous wording

We repurchased and canceled 4.4 million shares of Class A common stock for a total of $188 million during the three months ended March 31, 2025. During the three months ended March 31, 2024, we repurchased and canceled 5.4 million shares of Class A common stock for a total of $158 million.

Current wording

We repurchased and canceled 9.8 million shares of Class A common stock for a total of $384 million during the six months ended June 30, 2025. During the six months ended June 30, 2024, we repurchased and canceled 10.5 million shares of Class A common stock for a total of $324 million.

Previous wording

We believe cash on hand, cash flows from operating activities, the available revolving credit facility, access to our uncommitted lines of credit, and availability under our existing shelf registrations of debt will provide us with sufficient capital resources and liquidity in the short-term and long-term to manage our working capital needs, meet contractual obligations, fund capital expenditures and dividends, repay debt, repurchase our common stock, and support the development of our short-term and long-term operating strategies.

Current wording

We believe cash on hand, cash flows from operating activities, the available revolving credit facility, access to our uncommitted lines of credit, and availability under our existing shelf registrations of debt will provide us with sufficient capital resources and liquidity in the short-term and long-term to manage our working capital needs; meet contractual obligations; fund strategic growth initiatives, capital expenditures, and dividends; repay debt; repurchase our common stock; and support the development of our short-term and long-term operating strategies.

Previous wording

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk through working with our customers to restructure their debts. With regard to our primary customer in Mexico, there have not historically been any material losses due to uncollectible accounts receivable, nor are any such balances currently in dispute. As of March 31, 2025 and December 31, 2024, the Company had issued credit default swaps ("CDS") totaling $775 million and $553 million, respectively, to third-party financial institutions. The CDS relate to borrowings provided by these financial institutions to our primary customer in Mexico who utilized these borrowings to pay certain of the Company's outstanding receivables. The total notional amount remaining on the issued CDS was $556 million and $412 million as of March 31, 2025 and December 31, 2024, respectively, which will reduce each month through September 2026 as the customer repays the borrowings. As of March 31, 2025, the fair value of these derivative liabilities is not material.

Current wording

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk through working with our customers to restructure their debts. With regard to our primary customer in Mexico, there have not historically been any material losses due to uncollectible accounts receivable, nor are any such balances currently in dispute. As of June 30, 2025 and December 31, 2024, the Company had credit default swaps ("CDS") totaling $775 million and $553 million, respectively, with third-party financial institutions. The CDS relate to borrowings provided by these financial institutions to our primary customer in Mexico who utilized these borrowings to pay certain of the Company's outstanding receivables. The total notional amount remaining on the issued CDS was $466 million and $412 million as of June 30, 2025 and December 31, 2024, respectively, which will reduce each month through September 2026 as the customer repays the borrowings. As of June 30, 2025, the fair value of these derivative liabilities is not material.