filings.toolsBaker Hughes 10-Q 2025-06-30
Filed 2025-07-23. 8 sections, 141K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2025
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from_________to__________
Commission File Number 1-38143
| Baker Hughes Company |
(Exact name of registrant as specified in its charter)
| Delaware | 81-4403168 | ||||||||||
| (State or other jurisdiction | (I.R.S. Employer Identification No.) | ||||||||||
| of incorporation or organization) | |||||||||||
| 575 N. Dairy Ashford Rd., Suite 100 | |||||||||||
| Houston, | Texas | 77079-1121 | |||||||||
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (713) 439-8600
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
| Class A Common Stock, par value $0.0001 per share | BKR | The Nasdaq Stock Market LLC | ||||||
| 5.125% Senior Notes due 2040 of Baker Hughes Holdings LLC and Baker Hughes Co-Obligor, Inc. | BKR40 | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
As of July 16, 2025, the registrant had outstanding 985,879,124 shares of Class A Common Stock, $0.0001 par value per share.
Baker Hughes Company
Table of Contents
Baker Hughes Company 2025 Second Quarter Form 10-Q | i
PART I — FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
Baker Hughes Company
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (In millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Revenue: | ||||||||||||||
| Sales of goods | $ | 4,516 | $ | 4,552 | $ | 8,660 | $ | 8,550 | ||||||
| Sales of services | 2,394 | 2,587 | 4,677 | 5,007 | ||||||||||
| Total revenue | 6,910 | 7,139 | 13,337 | 13,557 | ||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of goods sold | 3,602 | 3,657 | 6,932 | 6,933 | ||||||||||
| Cost of services sold | 1,693 | 1,836 | 3,315 | 3,536 | ||||||||||
| Selling, general and administrative | 567 | 643 | 1,144 | 1,261 | ||||||||||
| Research and development costs | 161 | 158 | 307 | 322 | ||||||||||
| Other (income) expense, net | (134) | (26) | 6 | (48) | ||||||||||
| Interest expense, net | 54 | 47 | 105 | 88 | ||||||||||
| Income before income taxes | 967 | 824 | 1,528 | 1,465 | ||||||||||
| Provision for income taxes | (256) | (243) | (408) | (421) | ||||||||||
| Net income | 711 | 581 | 1,120 | 1,044 | ||||||||||
| Less: Net income attributable to noncontrolling interests | 10 | 2 | 17 | 10 | ||||||||||
| Net income attributable to Baker Hughes Company | $ | 701 | $ | 579 | $ | 1,103 | $ | 1,034 | ||||||
| Per share amounts: | ||||||||||||||
| Basic income per Class A common stock | $ | 0.71 | $ | 0.58 | $ | 1.11 | $ | 1.04 | ||||||
| Diluted income per Class A common stock | $ | 0.71 | $ | 0.58 | $ | 1.11 | $ | 1.03 | ||||||
| Cash dividend per Class A common stock | $ | 0.23 | $ | 0.21 | $ | 0.46 | $ | 0.42 |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 1
Baker Hughes Company
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Net income | $ | 711 | $ | 581 | $ | 1,120 | $ | 1,044 | ||||||
| Less: Net income attributable to noncontrolling interests | 10 | 2 | 17 | 10 | ||||||||||
| Net income attributable to Baker Hughes Company | 701 | 579 | 1,103 | 1,034 | ||||||||||
| Other comprehensive income (loss): | ||||||||||||||
| Foreign currency translation adjustments | 325 | (128) | 513 | (192) | ||||||||||
| Cash flow hedges | 1 | (4) | 3 | (2) | ||||||||||
| Benefit plans | (8) | 6 | (7) | 9 | ||||||||||
| Other comprehensive income (loss) | 318 | (126) | 509 | (185) | ||||||||||
| Less: Other comprehensive income attributable to noncontrolling interests | 1 | — | 1 | — | ||||||||||
| Other comprehensive income (loss) attributable to Baker Hughes Company | 317 | (126) | 508 | (185) | ||||||||||
| Comprehensive income | 1,029 | 455 | 1,629 | 859 | ||||||||||
| Less: Comprehensive income attributable to noncontrolling interests | 11 | 2 | 18 | 10 | ||||||||||
| Comprehensive income attributable to Baker Hughes Company | $ | 1,018 | $ | 453 | $ | 1,611 | $ | 849 |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 2
Baker Hughes Company
Condensed Consolidated Statements of Financial Position
(Unaudited)
| (In millions, except par value) | June 30, 2025 | December 31, 2024 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,087 | $ | 3,364 | ||||
| Current receivables, net | 6,511 | 7,122 | ||||||
| Inventories, net | 5,105 | 4,954 | ||||||
| All other current assets | 2,915 | 1,771 | ||||||
| Total current assets | 17,618 | 17,211 | ||||||
| Property, plant and equipment (net of accumulated depreciation of $6,367 and $6,056) | 5,176 | 5,127 | ||||||
| Goodwill | 5,801 | 6,078 | ||||||
| Other intangible assets, net | 3,919 | 3,951 | ||||||
| Contract and other deferred assets | 1,841 | 1,730 | ||||||
| Deferred income tax assets | 1,371 | 1,284 | ||||||
| All other assets | 3,014 | 2,982 | ||||||
| Total assets | $ | 38,740 | $ | 38,363 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 4,340 | $ | 4,542 | ||||
| Short-term debt | 66 | 53 | ||||||
| Progress collections and deferred income | 5,680 | 5,672 | ||||||
| All other current liabilities | 2,429 | 2,724 | ||||||
| Total current liabilities | 12,515 | 12,991 | ||||||
| Long-term debt | 5,968 | 5,970 | ||||||
| Liabilities for pensions and other postretirement benefits | 997 | 988 | ||||||
| Deferred income tax liabilities | 106 | 83 | ||||||
| All other liabilities | 1,286 | 1,276 | ||||||
| Equity: | ||||||||
| Class A Common Stock, $0.0001 par value - 2,000 authorized, 985 and 990 issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | — | — | ||||||
| Capital in excess of par value | 25,087 | 25,896 | ||||||
| Retained loss | (4,737) | (5,840) | ||||||
| Accumulated other comprehensive loss | (2,653) | (3,161) | ||||||
| Baker Hughes Company equity | 17,697 | 16,895 | ||||||
| Noncontrolling interests | 171 | 160 | ||||||
| Total equity | 17,868 | 17,055 | ||||||
| Total liabilities and equity | $ | 38,740 | $ | 38,363 |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 3
Baker Hughes Company
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| (In millions, except per share amounts) | Class A Common Stock | Capital in Excess of Par Value | Retained Loss | Accumulated Other Comprehensive Loss | Non- controlling Interests | Total Equity | ||||||||||||||
| Balance at December 31, 2024 | $ | — | $ | 25,896 | $ | (5,840) | $ | (3,161) | $ | 160 | $ | 17,055 | ||||||||
| Comprehensive income: | ||||||||||||||||||||
| Net income |
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and the related notes included in Item 1 thereto, as well as our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report").
Baker Hughes Company ("Baker Hughes," "the Company," "we," "us," or "our") is an energy technology company with a broad and diversified portfolio of technologies and services that span the energy and industrial value chain. We conduct business in more than 120 countries and employ approximately 57,000 employees. We operate through our two business segments: Oilfield Services & Equipment ("OFSE") and Industrial & Energy Technology ("IET"). We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments, as well as broader industrial and new energy markets.
EXECUTIVE SUMMARY
Market Conditions
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.
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.
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.
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.
Financial Results and Key Company Initiatives
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.
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.
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.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 25
Outlook
Our business is exposed to a number of macro factors, which influence our outlook and expectations given the current macroeconomic uncertainty and continued volatile conditions in the industry. All of our outlook expectations are purely based on the market as we see it today and are subject to changing conditions in the industry.
-
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.
-
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.
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.
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.
Sustainability
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.
BUSINESS ENVIRONMENT
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.
Our revenue is predominately generated from the sale of products and services to major, national, and independent oil and natural gas companies worldwide, and is dependent on spending by our customers for oil and natural gas exploration, field development and production. This spending is driven by a number of factors, including our customers' forecasts of future energy demand and supply, their access to resources to develop and produce oil and natural gas, their ability to fund their capital programs, the impact of new government regulations, and their expectations for oil and natural gas prices as a key driver of their cash flows.
Oil and Natural Gas Prices
Outside North America, customer spending is influenced by Brent oil prices. In North America, customer spending is influenced by WTI oil prices and natural gas prices are measured by the Henry Hub Natural Gas Spot Price.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 26
Oil and natural gas prices are summarized in the table below as averages of the daily closing prices during each of the periods indicated.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||
| Brent oil prices ($/Bbl) (1) | $ | 68.07 | $ | 84.68 | $ | 72.03 | $ | 83.79 | ||||||
| WTI oil prices ($/Bbl) (2) | 64.57 | 81.81 | 68.12 | 79.69 | ||||||||||
| Natural gas prices ($/mmBtu) (3) | 3.19 | 2.07 | 3.66 | 2.11 |
(1)Energy Information Administration ("EIA") Europe Brent Spot Price per Barrel
(2)EIA Cushing, OK West Texas Intermediate ("WTI") spot price
(3)EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit
Rig Count
Rig counts are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. Therefore, rig counts may act as a leading indicator of market activity and reflect the relative strength of energy prices; however, these counts should not be solely relied on as other specific and pervasive conditions may exist that affect overall energy prices and market activity.
Rig counts are compiled weekly for the U.S. and Canada and monthly for all international rigs. Published international rig counts do not include rigs drilling in certain locations such as onshore China because this information is not readily available.
The rig counts are summarized in the table below as averages for each of the periods indicated.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||
| North America | 699 | 738 | (5) | % | 751 | 785 | (4) | % | ||||||||||||
| International | 897 | 963 | (7) | % | 900 | 964 | (7) | % | ||||||||||||
| Worldwide | 1,596 | 1,701 | (6) | % | 1,651 | 1,749 | (6) | % |
RESULTS OF OPERATIONS
The discussions below relating to significant line items from our condensed consolidated statements of income (loss) are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items. In addition, the discussions below for revenue and cost of revenue are on a total basis as the business drivers for product sales and services are similar. All dollar amounts in tabulations in this section are in millions of dollars, unless otherwise stated. Certain columns and rows may not add due to the use of rounded numbers.
Our condensed consolidated statements of income (loss) display sales and costs of sales in accordance with the Securities and Exchange Commission ("SEC") regulations under which "goods" is required to include all sales of tangible products and "services" must include all other sales, including other service activities. For the amounts shown below, we distinguish between "equipment" and "product services," where product services refer to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of our operations. We refer to "product services" simply as "services" within Management's Discussion and Analysis of Financial Condition and Results of Operations.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 27
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 is evaluated based on segment 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).
In evaluating the performance, we primarily use the following:
Volume: Volume is defined as the increase or decrease in products and/or services sold period-over-period excluding the impact of foreign exchange. The volume impact on profit is calculated by multiplying the prior period profit rate by the change in revenue volume between the current and prior period. Volume also includes price, which is defined as the change in sales price for a comparable product or service period-over-period and is calculated as the period-over-period change in sales prices of comparable products and services.
Foreign Exchange ("FX"): FX measures the translational foreign exchange impact, or the translation impact of the period-over-period change on sales and costs directly attributable to change in the foreign exchange rate compared to the U.S. dollar. FX impact is calculated by multiplying the functional currency amounts (revenue or profit) with the period-over-period FX rate variance, using the average exchange rate for the respective period.
(Inflation)/Deflation: (Inflation)/deflation is defined as the increase or decrease in direct and indirect costs of the same type for an equal amount of volume. It is calculated as the year-over-year change in cost (i.e. price paid) of direct material, compensation and benefits, and overhead costs.
Productivity: Productivity is measured by the remaining variance in profit, after adjusting for the period-over-period impact of volume and price, foreign exchange, and (inflation)/deflation as defined above. Improved or lower period-over-period cost productivity is the result of cost efficiencies or inefficiencies, such as cost decreasing or increasing more than volume, or cost increasing or decreasing less than volume, or changes in sales mix among segments. This also includes the period-over-period variance of transactional foreign exchange, aside from those foreign currency devaluations that are reported separately for business evaluation purposes.
Orders and Remaining Performance Obligations
Summarized orders information for our segments are shown in the following table.
| Three Months Ended June 30, | $ Change | Six Months Ended June 30, | $ Change | |||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
| Orders: | ||||||||||||||||||||
| Oilfield Services & Equipment | $ | 3,503 | $ | 4,068 | $ | (565) | $ | 6,784 | $ | 7,692 | $ | (909) | ||||||||
| Gas Technology Equipment | 781 | 1,493 | (712) | 2,116 | 2,723 | (607) | ||||||||||||||
| Gas Technology Services | 986 | 769 | 218 | 1,899 | 1,461 | 439 | ||||||||||||||
| Total Gas Technology | 1,767 | 2,261 | (494) | 4,015 | 4,183 | (168) | ||||||||||||||
| Industrial Products | 513 | 524 | (12) | 1,013 | 1,070 | (57) | ||||||||||||||
| Industrial Solutions | 327 | 281 | 46 | 608 | 538 | 70 | ||||||||||||||
| Total Industrial Technology | 839 | 805 | 34 | 1,621 | 1,608 | 13 | ||||||||||||||
| Climate Technology Solutions (1) | 923 | 392 | 531 | 1,071 | 585 | 486 | ||||||||||||||
| Industrial & Energy Technology | 3,530 | 3,458 | 72 | 6,708 | 6,376 | 332 | ||||||||||||||
| Total | $ | 7,032 | $ | 7,526 | $ | (494) | $ | 13,492 | $ | 14,068 | $ | (577) |
(1)For the three and six months ended June 30, 2025 and 2024, total new energy orders incorporates CTS in IET.
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.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 28
Second Quarter of 2025 Compared to the Second Quarter of 2024
Revenue decreased $0.2 billion to $6.9 billion. OFSE decreased $0.4 billion and IET increased $0.2 billion.
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.
Research and development cost increased $3 million, or 2%, to $161 million.
We recorded other income of $134 million in the second quarter of 2025, which included a net gain of $119 million from the change in fair value of equity securities. In the second quarter of 2024, we recorded $26 million of other income. Included in this amount was a net gain of $19 million from the change in fair value of equity securities.
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.
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.
Net income increased $0.1 billion, or 21%, to $0.7 billion compared to the second quarter of 2024.
Segment Revenues and Segment EBITDA
Oilfield Services & Equipment
| Three Months Ended June 30, | $ Change | ||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | |||||||||||
| Well Construction | $ | 921 | $ | 1,090 | $ | (169) | |||||
| Completions, Intervention, and Measurements | 935 | 1,118 | (182) | ||||||||
| Production Solutions | 968 | 958 | 10 | ||||||||
| Subsea & Surface Pressure Systems | 793 | 845 | (52) | ||||||||
| Total | $ | 3,617 | $ | 4,011 | $ | (394) | |||||
| Cost of goods and services sold | $ | 2,891 | $ | 3,200 | $ | (309) | |||||
| Research and development costs | 65 | 63 | 2 | ||||||||
| Selling, general and administrative | 219 | 255 | (36) | ||||||||
| Other (income) expense | (1) | — | (1) | ||||||||
| Less: Depreciation and amortization | (233) | (223) | (10) | ||||||||
| Segment EBITDA | $ | 677 | $ | 716 | $ | (39) |
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.
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,
Baker Hughes Company 2025 Second Quarter Form 10-Q | 29
changes in business mix, and inflation, partially offset by overall productivity improvements, including cost out initiatives, and favorable price.
Industrial & Energy Technology
| Three Months Ended June 30, | $ Change | ||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | |||||||||||
| Gas Technology Equipment | $ | 1,624 | $ | 1,539 | $ | 85 | |||||
| Gas Technology Services | 752 | 691 | 61 | ||||||||
| Total Gas Technology | 2,377 | 2,230 | 146 | ||||||||
| Industrial Products | 488 | 509 | (21) | ||||||||
| Industrial Solutions | 273 | 262 | 11 | ||||||||
| Total Industrial Technology | 761 | 770 | (10) | ||||||||
| Climate Technology Solutions | 156 | 128 | 28 | ||||||||
| Total | $ | 3,293 | $ | 3,128 | $ | 165 | |||||
| Cost of goods and services sold | $ | 2,389 | $ | 2,268 | $ | 121 | |||||
| Research and development costs | 96 | 95 | 1 | ||||||||
| Selling, general and administrative | 283 | 323 | (40) | ||||||||
| Other (income) expense | (4) | — | (4) | ||||||||
| Less: Depreciation and amortization | (56) | (55) | (1) | ||||||||
| Segment EBITDA | $ | 585 | $ | 497 | $ | 88 |
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.
IET segment EBITDA was $585 million in the second quarter of 2025 compared to $497 million in the second quarter of 2024. The improved performance in the second quarter of 2025 was driven by positive pricing, favorable FX, and overall productivity, partially offset by inflationary pressure.
The First Six Months of 2025 Compared to the First Six Months of 2024
Revenue decreased $0.2 billion to $13.3 billion. OFSE decreased $0.7 billion and IET increased $0.5 billion.
Selling, general and administrative cost decreased $117 million, or 9%, to $1,144 million driven primarily by a continued focus on cost optimization, partially offset by inflationary pressure.
Research and development cost decreased $15 million, or 5%, to $307 million, mainly related to timing of project spend within the year.
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.
Net interest expense in the first six months of 2025 was $105 million, which includes interest income of $39 million. Net interest expense increased $17 million compared to the first six months of 2024, with lower interest income primarily driven by lower interest rates.
In the first six months of 2025 and 2024, the provision for income taxes was $408 million and $421 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
Baker Hughes Company 2025 Second Quarter Form 10-Q | 30
income subject to U.S. tax at an effective rate less than 21% due to valuation allowances, which were subsequently released later in 2024.
Net income increased $0.1 billion, or 7%, to $1.1 billion compared to the first six months of 2024.
Segment Revenues and Segment EBITDA
Oilfield Services & Equipment
| Six Months Ended June 30, | $ Change | ||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | |||||||||||
| Well Construction | $ | 1,812 | $ | 2,151 | $ | (339) | |||||
| Completions, Intervention, and Measurements | 1,861 | 2,123 | (263) | ||||||||
| Production Solutions | 1,867 | 1,903 | (36) | ||||||||
| Subsea & Surface Pressure Systems | 1,576 | 1,617 | (41) | ||||||||
| Total | $ | 7,116 | $ | 7,794 | $ | (678) | |||||
| Cost of goods and services sold | $ | 5,710 | $ | 6,253 | $ | (543) | |||||
| Research and development costs | 126 | 131 | (5) | ||||||||
| Selling, general and administrative | 440 | 495 | (55) | ||||||||
| Other (income) expense | (1) | — | (1) | ||||||||
| Less: Depreciation and amortization | (459) | (445) | (14) | ||||||||
| Segment EBITDA | $ | 1,300 | $ | 1,360 | $ | (61) |
OFSE revenue of $7,116 million decreased $678 million, in the first six months of 2025 compared to the first six months of 2024, driven by lower international and domestic rig count. From a geographical perspective, international revenue was $5,267 million, a decrease of $514 million from the first six months of 2024, driven by all regions. North America revenue was $1,849 million in the first six months of 2025, a decrease of $164 million from the first six months of 2024.
OFSE segment EBITDA was $1,300 million in the first six months of 2025 compared to $1,360 million in the first six months of 2024. The reduction of EBITDA in the first six months of 2025 was a result of overall lower volume, inflationary pressure, and changes in business mix, partially offset by overall productivity improvement, cost out initiatives, and favorable price.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 31
Industrial & Energy Technology
| Six Months Ended June 30, | $ Change | ||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | |||||||||||
| Gas Technology Equipment | $ | 3,080 | $ | 2,749 | $ | 330 | |||||
| Gas Technology Services | 1,344 | 1,305 | 39 | ||||||||
| Total Gas Technology | 4,424 | 4,054 | 370 | ||||||||
| Industrial Products | 933 | 971 | (38) | ||||||||
| Industrial Solutions | 531 | 526 | 5 | ||||||||
| Total Industrial Technology | 1,464 | 1,498 | (34) | ||||||||
| Climate Technology Solutions | 334 | 211 | 123 | ||||||||
| Total | $ | 6,221 | $ | 5,763 | $ | 459 | |||||
| Cost of goods and services sold | $ | 4,501 | $ | 4,172 | $ | 329 | |||||
| Research and development costs | 181 | 191 | (10) | ||||||||
| Selling, general and administrative | 567 | 628 | (61) | ||||||||
| Other (income) expense | (5) | — | (5) | ||||||||
| Less: Depreciation and amortization | (109) | (111) | 2 | ||||||||
| Segment EBITDA | $ | 1,086 | $ | 883 | $ | 202 |
IET revenue of $6,221 million increased $459 million, or 8%, in the first six months of 2025 compared to the first six months of 2024, primarily in GTE and CTS.
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.
LIQUIDITY AND CAPITAL RESOURCES
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.
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.
We have 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 we consider customary. No related events of default have occurred. The Credit Agreement is fully and unconditionally guaranteed on a senior unsecured basis by Baker Hughes. At June 30, 2025 and December 31, 2024, there were no borrowings under the Credit Agreement.
Certain Senior Notes contain covenants that restrict our ability to take certain actions. See "Note 8. Debt" of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report for further details. At June 30, 2025, we were in compliance with all debt covenants. Our next debt maturity is December 2026.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 32
We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the uncertainty created by geopolitical events, a global pandemic, or a significant decline in oil and gas prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be negatively impacted. Additionally, it could cause the rating agencies to lower our credit ratings. There are no ratings triggers that would accelerate the maturity of any borrowings under our committed credit facility; however, a downgrade in our credit ratings could increase the cost of borrowings under the credit facility. Should this occur, we could seek alternative sources of funding, including borrowing under the credit facility.
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.
Cash Flows
Cash flows provided by (used in) each type of activity were as follows for the six months ended June 30:
| (In millions) | 2025 | 2024 | ||||||
| Operating activities | $ | 1,219 | $ | 1,132 | ||||
| Investing activities | (596) | (530) | ||||||
| Financing activities | (945) | (929) |
Operating Activities
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.
Our largest source of operating cash is payments from customers, of which the largest component is collecting cash related to our sales of products and services, including advance payments or progress collections for work to be performed. The primary use of operating cash is to pay our suppliers, employees, tax authorities, and others for a wide range of goods and services.
Cash from operating activities is primarily generated from net income or loss adjusted for certain noncash items (including depreciation, amortization, change in fair value of equity securities, stock-based compensation cost, and deferred tax benefit or provision).
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.
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.
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.
Investing Activities
Cash flows used in investing activities were $596 million and $530 million for the six months ended June 30, 2025 and 2024, respectively.
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.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 33
Financing Activities
Cash flows used in financing activities were $945 million and $929 million for the six months ended June 30, 2025 and 2024, respectively.
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.
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.
We repaid long-term debt of $125 million primarily related to debentures that matured in June 2024 during the six months ended June 30, 2024.
Cash Requirements
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.
Our capital expenditures can be adjusted and managed by us to match market demand and activity levels. We continue to believe that based on current market conditions, capital expenditures in 2025 are expected to be made at a rate that would equal up to 5% of annual revenue. The expenditures are expected to be used primarily for normal, recurring items necessary to support our business.
Based on our current outlook, we anticipate making income tax payments in the range of $1.0 billion to $1.1 billion in 2025.
Other Factors Affecting Liquidity
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.
A customer's failure or delay in payment could have a material adverse effect on our short-term liquidity and results of operations. Our gross customer receivables were 17% in the U.S. as of June 30, 2025. No other country accounted for more than 10% of our gross customer receivables at this date.
International operations: Our cash that is held outside the U.S. is 82% of the total cash balance as of June 30, 2025. Depending on the jurisdiction or country where this cash is held, we may not be able to use this cash quickly and efficiently due to exchange or cash controls that could make it challenging. As a result, our cash balance may not represent our ability to quickly and efficiently use this cash.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 34
Guarantor Financial Information
We guarantee various senior unsecured notes and senior unsecured debentures (collectively, the "Debt Securities") outstanding with an aggregate principal amount of $5.8 billion as of June 30, 2025, with maturities ranging from 2026 to 2047. The Debt Securities constitute debt obligations of Baker Hughes Holdings LLC ("BHH LLC"), an indirect, 100% owned subsidiary and the primary operating company of Baker Hughes, and Baker Hughes Co-Obligor, Inc, a 100% owned finance subsidiary of BHH LLC (together with BHH LLC, the "Issuers") that was incorporated for the sole purpose of serving as a corporate co-obligor of debt securities. The Debt Securities are fully and unconditionally guaranteed on a senior unsecured basis by the Company and rank equally in right of payment with all of the Company's other senior and unsecured debt obligations. However, because these obligations are not secured, they would be effectively subordinated to any existing or future secured indebtedness of Baker Hughes and the Issuers.
As permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded summarized financial information for the Issuers because the combined assets, liabilities, and results of operations of the Issuers are not materially different than the corresponding amounts in our condensed consolidated financial statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
CRITICAL ACCOUNTING ESTIMATES
Our critical accounting estimation processes are consistent with those described in Item 7 of Part II, "Management's discussion and analysis of financial condition and results of operations" of our 2024 Annual Report.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement"). All statements, other than historical facts, including statements regarding the presentation of the Company's operations in future reports and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words "may," "will," "should," "potential," "intend," "expect," "would," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "predict," "continue," "target," "goal" or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, the risk factors identified in the "Risk Factors" section of Part II of Item 1A of this report and Part 1 of Item 1A of our 2024 Annual Report and those set forth from time-to-time in other filings by the Company with the SEC. These documents are available through our website or through the SEC's Electronic Data Gathering and Analysis Retrieval (EDGAR) system at http://www.sec.gov.
Any forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For quantitative and qualitative disclosures about market risk affecting us, see Item 7A. "Quantitative and Qualitative Disclosures about Market Risk," in our 2024 Annual Report. Our exposure to market risk has not changed materially since December 31, 2024.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 35
Item 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Exchange Act) were effective at a reasonable assurance level.
There has been no change in our internal controls over financial reporting during the quarter ended June 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 36
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See discussion of legal proceedings in "Note 16. Commitments and Contingencies" of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report, Item 3 of Part I of our 2024 Annual Report and Note 19 of the Notes to Consolidated Financial Statements included in Item 8 of our 2024 Annual Report.
Item 1A. RISK FACTORS
As of the date of this filing, the Company and our operations continue to be subject to the risk factors previously discussed in the "Risk Factors" sections contained in the 2024 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table contains information about our purchases of our Class A common stock equity securities during the three months ended June 30, 2025.
| Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share (2) | Total Number of Shares Purchased as Part of a Publicly Announced Program (3)(4) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (3)(4) | |||||||||||||
| April 1-30, 2025 | 857,498 | $ | 35.70 | 839,500 | $ | 1,515,100,145 | |||||||||||
| May 1-31, 2025 | 4,507,700 | $ | 36.87 | 4,506,172 | $ | 1,348,978,828 | |||||||||||
| June 1-30, 2025 | 8,179 | $ | 37.50 | — | $ | — | |||||||||||
| Total | 5,373,377 | $ | 36.68 | 5,345,672 |
(1)Represents Class A common stock purchased from employees to satisfy the tax withholding obligations primarily in connection with the vesting of restricted stock units.
(2)Average price paid for Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock units and shares purchased in the open market under our publicly announced purchase program.
(3)On July 30, 2021, our Board of Directors authorized the Company to repurchase up to $2 billion of its Class A common stock. On October 27, 2022, our Board of Directors authorized an increase to our repurchase program of $2 billion of additional Class A common stock, increasing its existing repurchase authorization of $2 billion to $4 billion. The repurchase program may be suspended or discontinued at any time and does not have a specified expiration date.
(4)During the three months ended June 30, 2025, we repurchased 5.3 million shares of Class A common stock at an average price of $36.66 per share for a total of $196 million.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Our barite mining operations, in support of our OFSE segment, are subject to regulation by the Federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 37
Item 5. OTHER INFORMATION
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2025, none of our officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) and (c), respectively, of Regulation S-K, for the purchase or sale of our securities.
Item 6. EXHIBITS
Each exhibit identified below is filed as a part of this report. Exhibits designated with an "*" are filed as an exhibit to this Quarterly Report on Form 10-Q and Exhibits designated with an "**" are furnished as an exhibit to this Quarterly Report on Form 10-Q. Exhibits designated with a "+" are identified as management contracts or compensatory plans or arrangements. Exhibits previously filed are incorporated by reference.
Baker Hughes Company 2025 Second Quarter Form 10-Q | 38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Baker Hughes Company (Registrant) | |||||||||||
| Date: | July 23, 2025 | By: | /s/ AHMED MOGHAL | ||||||||
| Ahmed Moghal | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
| Date: | July 23, 2025 | By: | /s/ REBECCA CHARLTON | ||||||||
| Rebecca Charlton | |||||||||||
| Senior Vice President, Controller and Chief Accounting Officer |
Baker Hughes Company 2025 Second Quarter Form 10-Q | 39