Baker Hughes BKR · USD

SEGMENT INFORMATIONThe Company's segments are determined as those operations whose results are reviewed regularly by the chief operating decision maker ("CODM"), who is the Company's Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company reports its operating results through two operating segments, OFSE and IET. Each segment is organized and managed based upon the nature of the Company's markets and customers and consists of similar products and services. These products and services operate across upstream oil and gas and broader energy and industrial markets. The following is a description of each segment's business operations:Oilfield Services & Equipment provides products and services for onshore and offshore oilfield operations across the lifecycle of a well, ranging from exploration, appraisal, and development, to production, rejuvenation, and decommissioning. OFSE is organized into four product lines: Well Construction, which encompasses drilling services, drill bits, and drilling & completions fluids; Completions, Intervention, and Measurements, which encompasses well completions, pressure pumping, and wireline services; Production Solutions, which spans artificial lift systems and oilfield & industrial chemicals; and Subsea & Surface Pressure Systems, which encompasses subsea projects and services, surface pressure control, and flexible pipe systems. Beyond its traditional oilfield concentration, OFSE is expanding its capabilities and technology portfolio to meet the challenges of a net-zero future. These efforts include expanding into new energy areas such as geothermal and carbon capture, utilization and storage, strengthening its digital architecture, and addressing key energy market themes.Industrial & Energy Technology provides technology solutions and services for mechanical-drive, compression, and power-generation applications across the energy industry, including oil and gas, LNG operations, downstream refining, and petrochemical markets, as well as lower carbon solutions to broader energy and industrial sectors. IET also provides equipment, software, and services that serve a wide range of industries including petrochemical and refining, nuclear, aviation, automotive, mining, cement, metals, pulp and paper, and food and beverage.

PROGRESS COLLECTIONS AND DEFERRED INCOMEContract liabilities include progress collections, which reflect billings in excess of revenue, and deferred income on long-term contracts to construct technically complex equipment and provide long-term product service agreements and extended maintenance arrangements. Contract liabilities consist of the following at December 31:20252024Equipment contracts and other service agreements$5,249 $5,047 Long-term product service agreements507 503 Progress collections5,756 5,550 Deferred income148 122 Progress collections and deferred income (contract liabilities)$5,904 $5,672 Revenue recognized during the years ended December 31, 2025 and 2024 that was included in the contract liabilities at the beginning of the year was $4,315 million and $4,398 million, respectively.REVENUE RELATED TO CONTRACTS WITH CUSTOMERSDISAGGREGATED REVENUEThe Company disaggregates its revenue from contracts with customers by product line for both the OFSE and IET segments, as the Company believes this best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors. In addition, management views revenue from contracts with customers for OFSE by geography based on the location to where the product is shipped or the services are performed.The series of tables below present the Company's revenue disaggregated by these categories.Total Revenue202520242023Well Construction$3,646 $4,145 $4,387 Completions, Intervention, and Measurements3,750 4,154 4,170 Production Solutions3,806 3,860 3,854 Subsea & Surface Pressure Systems3,122 3,470 2,950 Oilfield Services & Equipment14,324 15,628 15,361 Gas Technology Equipment6,619 5,693 4,232 Gas Technology Services3,028 2,797 2,600 Total Gas Technology9,647 8,490 6,832 Industrial Products1,991 2,040 1,962 Industrial Solutions1,123 1,065 983 Controls (1)— — 41 Total Industrial Technology3,114 3,105 2,987 Climate Technology Solutions647 605 326 Industrial & Energy Technology13,409 12,201 10,145 Total$27,733 $27,829 $25,506 (1)The sale of the Company's controls business was completed in April 2023.

COMMITMENTS AND CONTINGENCIESLITIGATIONThe Company is subject to legal proceedings arising in the ordinary course of business. Because legal proceedings are inherently uncertain, management is unable to predict the ultimate outcome of such matters. For matters where the range of possible loss is probable and reasonably estimable, the Company has accrued the appropriate amount for the matters disclosed. Unless otherwise disclosed, any potential loss above accrued amounts is not reasonably estimable. Based on the opinion of management, the Company does not expect the ultimate outcome of currently pending legal proceedings to have a material adverse effect on its results of operations, financial position, or cash flows. However, there can be no assurance as to the ultimate outcome of these matters.On or around February 15, 2023, the lead plaintiff and three additional named plaintiffs in a putative securities class action styled The Reckstin Family Trust, et al., v. C3.ai, Inc., et al., No. 4:22-cv-01413-HSG, filed an amended class action complaint (the "Amended Complaint") in the United States District Court for the Northern District of California. The Amended Complaint names the following as defendants: (i) C3.ai., Inc. ("C3 AI"), (ii) certain of C3 AI's current and/or former officers and directors, (iii) certain underwriters for the C3 AI initial public offering (the "IPO"), and (iv) the Company, and its President and CEO (who formerly served as a director on the board of C3 AI). The Amended Complaint alleges violations of the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") in connection with the IPO and the subsequent period between December 9, 2020 and December 2, 2021, during which BHH LLC held equity investments in C3 AI. The action seeks unspecified damages and the award of costs and expenses, including reasonable attorneys' fees. On February 22, 2024, the Court dismissed the claims against the Company. However, on April 4, 2024, the plaintiffs filed an amended complaint, reasserting their claims against the Company under the Securities Act and the Exchange Act. On or around February 14, 2025, the plaintiffs filed a further amended complaint, once again reasserting their claims against the Company under the Securities Act and the Exchange Act. At this time, the Company is not able to predict the outcome of these proceedings.

DEBTThe carrying value of the Company's short-term and long-term debt consists of the following at December 31:20252024AmountEffective InterestRate (1)AmountEffective InterestRate (1)Short-term and current portion of long-term debt2.061% Senior Notes due December 2026$599 2.4 %$— — %Other debt90 4.5 %53 4.6 %Total short-term and current portion of long-term debt689 53 Long-term debt 2.061% Senior Notes due December 2026— — %599 2.4 %3.337% Senior Notes due December 20271,324 4.9 %1,302 5.4 %6.875% Notes due January 2029 (2)255 4.0 %262 3.9 %3.138% Senior Notes due November 2029524 3.2 %523 3.2 %4.486% Senior Notes due May 2030498 4.6 %498 4.6 %5.125% Senior Notes due September 2040 (2)1,269 4.2 %1,275 4.2 %4.080% Senior Notes due December 20471,338 4.1 %1,338 4.1 %Other long-term debt190 4.0 %173 4.2 %Total long-term debt5,398 5,970 Total debt$6,087 $6,023 (1)Effective interest rate is based on the carrying value including issuance costs and interest rate swaps.(2)Represents long-term fixed rate debt obligations assumed in connection with the acquisition of BHI.The carrying value of short-term and long-term debt includes issuance costs and changes in fair value of the debt instrument hedged by interest rate swaps. At December 31, 2025 and 2024, these adjustments resulted in a net increase to the carrying value of the Company's debt totaling $102 million and $91 million, respectively. The estimated fair value of total debt at December 31, 2025 and 2024 was $5,628 million and $5,409 million, respectively. For a majority of the Company's debt, the fair value was determined using quoted period-end market prices. Where market prices are not available, the Company estimates fair values based on valuation methodologies using current market interest rate data adjusted for non-performance risk.Maturities of debt for each of the five years in the period ending December 31, 2030, and in the aggregate thereafter, are listed in the table below:20262027202820292030ThereafterTotal debt$689 $1,387 $55 $821 $514 $2,621 The Company has a $3.0 billion committed unsecured revolving credit facility (the "Credit Agreement") with commercial banks maturing in November 2028. The Credit Agreement contains certain representations and warranties, certain affirmative covenants and negative covenants, in each case considered customary. No related events of default have occurred. The Credit Agreement is fully and unconditionally guaranteed on a senior unsecured basis by Baker Hughes.

INCOME TAXESThe Company has adopted ASU 2023-09, effective prospectively for the fiscal year ended December 31, 2025. ASU 2023-09 provides for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.The provision for income taxes consists of the following:2025Current:U.S. federal$6 U.S. state19 Foreign930 Total current955 Deferred:U.S. federal(87)U.S. state(24)Foreign(591)Total deferred(702)Provision for income taxes$253 20242023Current:U.S.$39 $33 Foreign889 711 Total current928 744 Deferred:U.S.(556)(27)Foreign(115)(32)Total deferred(671)(59)Provision for income taxes$257 $685 On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA preserves the 21% U.S. Federal statutory tax rate and makes a favorable change to the business interest expense limitation. Further, the OBBBA also makes key elements of the Tax Cuts and Jobs Act permanent, including 100% bonus depreciation, domestic research cost expensing, and various expiring international provisions (with some modifications). Pursuant to ASC 740, changes in tax rates and tax law are required to be recognized in the period in which the legislation is enacted. The Company has completed its evaluation of the impact of this legislation and has determined that the OBBBA did not have a material impact on its 2025 financial statements.On August 16, 2022, the U.S. enacted The Inflation Reduction Act, which included a number of additional credits and deductions for businesses and individuals. The Inflation Reduction Act also included the adoption of the Corporate Alternative Minimum Tax in 2023, which is based on financial statement book income of large corporations. To date, the impact of the Corporate Alternative Minimum Tax has been immaterial to the Company.The geographic sources of income before income taxes consist of the following:202520242023U.S.$911 $1,099 $882 Foreign1,966 2,166 1,773 Income before income taxes$2,877 $3,265 $2,655 The reconciliation of the tax provision at the U.S. federal statutory rate to income tax expense is as follows:2025%Income before income taxes$2,877 U.S. federal statutory tax rate604 21.0 %State and local income taxes (1)(2)(0.1)%FederalEffect of cross-border tax lawsFDII deduction(73)(2.5)%Other37 1.3 %Tax creditsForeign tax credits(46)(1.6)%Other credits(26)(0.9)%Changes in valuation allowances55 1.9 %Nontaxable or nondeductible itemsOther(4)(0.

STOCK-BASED COMPENSATIONThe Company has the Long-Term Incentive Plan ("LTI Plan") under which it may grant restricted stock units ("RSU"), performance share units ("PSU"), stock options, and other equity-based awards to employees and non-employee directors providing services to the Company and its subsidiaries. The Company also provides an Employee Stock Purchase Plan for eligible employees. A total of up to 29.5 million shares of Class A common stock are reserved and available for issuance pursuant to awards granted under the LTI Plan over its term, which expires on the date of the annual meeting of the Company in 2031. A total of 17.6 million shares of Class A common stock are available for issuance as of December 31, 2025.Stock-based compensation cost was $203 million, $202 million, and $197 million for the years ended December 31, 2025, 2024, and 2023, respectively. Stock-based compensation cost is measured at the date of grant based on the calculated fair value of the award and is generally recognized on a straight-line basis over the vesting period of the equity grant. The compensation cost is determined based on awards ultimately expected to vest; therefore, the Company has reduced the cost for estimated forfeitures based on historical forfeiture rates. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods to reflect actual forfeitures. There were no stock-based compensation costs capitalized as the amounts were not material.Restricted StockThe Company may grant to its officers, directors, and key employees RSUs, where each unit represents the right to receive, at the end of a stipulated period, one unrestricted share of stock with no exercise price. Certain RSUs are subject to cliff or graded vesting, generally ranging over a period of three years. Non-employee directors are granted RSUs that immediately vest on the grant date. Cash dividend equivalents are accumulated on RSUs and are payable upon vesting of the awards. The Company determines the fair value of RSUs based on the market price of its common stock on the date of grant.The following table presents the changes in RSUs outstanding and related information (in thousands, except per unit prices):Number ofUnitsWeighted AverageGrant Date FairValue Per UnitUnvested balance at December 31, 202411,494 $29.06 Granted4,372 44.48 Vested(5,586)29.05 Forfeited(973)35.35 Unvested balance at December 31, 20259,307 $35.

LEASESThe Company's leasing activities primarily consist of operating leases for service centers, manufacturing facilities, sales and administrative offices, and certain equipment.The following table presents operating lease expense:Operating Lease Expense202520242023Short-term lease$492 $511 $503 Long-term fixed lease272 292 276 Long-term variable lease54 76 73 Total operating lease expense$818 $879 $852 Cash flows used in operating activities for operating leases approximate lease expense for the years ended December 31, 2025, 2024, and 2023.As of December 31, 2025, maturities of operating lease liabilities are as follows:YearOperating Leases2026$204 2027130 202892 202970 203047 Thereafter201 Total lease payments744 Less: imputed interest129 Total$615 Amounts recognized in the consolidated statements of financial position for operating leases consist of the following:20252024All other current liabilities$173 $198 All other liabilities442 475 Total$615 $673 Right-of-use assets of $622 million and $678 million as of December 31, 2025 and 2024, respectively, are included in "All other assets" in the consolidated statements of financial position. The weighted-average remaining lease term for the Company's operating leases was approximately seven years for the years ended December 31, 2025 and 2024. The weighted-average discount rate used to determine the operating lease liability as of December 31, 2025 and 2024 was 4.6% and 4.3%, respectively.

ACQUISITIONS, DISPOSITIONS, AND BUSINESSES HELD FOR SALEThe Company had no business acquisitions, dispositions, or businesses held for sale for the year ended December 31, 2024.ACQUISITIONSDuring 2025, the Company entered into a definitive agreement to acquire Chart. The Company will acquire all outstanding shares of Chart's common stock for $210 per share in cash, equivalent to a total enterprise value of approximately $13.6 billion. Under the terms of the agreement, the Company agreed to pay $258 million for the termination fee and the reimbursement of certain expenses on behalf of Chart to Flowserve Corporation ("Flowserve"), as a result of the termination of the merger agreement by and among Chart, Flowserve, and certain subsidiaries of Flowserve. This payment on behalf of Chart was recorded as an advance payment in "All other current assets" in the Company's consolidated statements of financial position and in "Net cash paid for acquisitions" in the Company's consolidated statements of cash flows. With regulatory reviews still underway in certain jurisdictions, the Company presently expects closing in the second quarter of 2026, understanding that the timing may evolve as those processes progress. See "Note 9. Debt" for further information on the financing for this transaction.During 2025, the Company completed the acquisition of CDC in the IET segment for total consideration of $554 million. CDC is a leading provider of safety-critical pressure management solutions. The assets acquired and liabilities assumed in this acquisition were recorded based on preliminary estimates of their fair values as of the acquisition date. As a result of this acquisition, the Company recorded $229 million of goodwill and $269 million of intangible assets, subject to final fair value adjustments. Pro forma results of operations for this acquisition have not been presented because the effects of the acquisition were not material to the Company's consolidated financial statements.During 2023, the Company completed the acquisition of businesses for total cash consideration of $301 million, net of cash acquired, which consisted primarily of the acquisition of Altus Intervention in the OFSE segment in April 2023. Altus Intervention is a leading international provider of well intervention services and downhole technology.