Baker Hughes Company (Nasdaq: BKR) ("Baker Hughes" or the
"Company") announced results today for the second quarter of 2024.
"Our strong second-quarter results further demonstrate that we
are on the right path in executing our strategy. We continue to
strengthen our operating performance, which is driving meaningful
margin expansion across both segments. Following our first-half
outperformance, we are raising the midpoint of our full-year
guidance by 5% and are confident in our ability to drive margins
structurally higher over the coming years," said Lorenzo Simonelli,
Baker Hughes Chairman and Chief Executive Officer.
"Order momentum continues, highlighted by $3.5 billion of IET
orders during the quarter that included a large SONATRACH award for
gas-boosting in Algeria's Hassi R'Mel gas field. This marks the
highest quarterly non-LNG equipment bookings in the Company's
history and again underscores the breadth and versatility of our
IET portfolio. New energy continues to gain momentum as we booked
$445 million of orders, also a record for the Company."
"Across both segments, we delivered outstanding second-quarter
results, leading to a 25% year-over-year increase in total company
adjusted EBITDA and 46% growth in adjusted EPS. Total company
adjusted EBITDA margins increased almost 150 basis points
year-over-year to 15.8%. This is a testament to the enhanced
operational rigor that is being exercised across our IET and OFSE
segments."
"We continued the positive trend of returning meaningful cash to
shareholders. In the quarter, we paid dividends of $209 million and
repurchased $166 million of shares, remaining on course to return
60% - 80% of free cash flow to our shareholders."
"Our exceptional second-quarter results are a credit to the hard
work and dedication of the employees at Baker Hughes; I recognize
this and express my sincere thanks to all of you," concluded
Simonelli.
* Non-GAAP measure. See reconciliations in the section titled
"Reconciliation of GAAP to non-GAAP Financial Measures."
|
Three Months Ended |
|
Variance |
(in
millions except per share amounts) |
June 30,2024 |
March 31,2024 |
June 30,2023 |
|
Sequential |
Year-over-year |
Orders |
$ |
7,526 |
$ |
6,542 |
$ |
7,474 |
|
15 |
% |
1 |
% |
Revenue |
|
7,139 |
|
6,418 |
|
6,315 |
|
11 |
% |
13 |
% |
Net income attributable to
Baker Hughes |
|
579 |
|
455 |
|
410 |
|
27 |
% |
41 |
% |
Adjusted net income
attributable to Baker Hughes* |
|
568 |
|
429 |
|
395 |
|
32 |
% |
44 |
% |
Operating income |
|
833 |
|
653 |
|
514 |
|
28 |
% |
62 |
% |
Adjusted operating
income* |
|
847 |
|
660 |
|
631 |
|
28 |
% |
34 |
% |
Adjusted EBITDA* |
|
1,130 |
|
943 |
|
907 |
|
20 |
% |
25 |
% |
Diluted earnings per share
(EPS) |
|
0.58 |
|
0.45 |
|
0.40 |
|
28 |
% |
43 |
% |
Adjusted diluted EPS* |
|
0.57 |
|
0.43 |
|
0.39 |
|
33 |
% |
46 |
% |
Cash flow from operating
activities |
|
348 |
|
784 |
|
858 |
|
(56 |
%) |
(59 |
%) |
Free
cash flow* |
|
106 |
|
502 |
|
623 |
|
(79 |
%) |
(83 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
* Non-GAAP measure. See reconciliations in the
section titled "Reconciliation of GAAP to non-GAAP Financial
Measures." EBITDA margin is defined as EBITDA divided by
revenue.
"F" is used in most instances when variance is
above 100%. Additionally, "U" is used when variance is below
(100)%.
Certain columns and rows in our tables and
financial statements may not sum up due to the use of rounded
numbers.
Quarter Highlights
The Oilfield Services & Equipment ("OFSE") business segment
continued to strengthen its relationship with Petrobras, receiving
multiple significant contracts for integrated and mature assets
solutions. Baker Hughes was awarded a major multi-year contract for
workover and plug and abandonment services in pre-salt and
post-salt fields offshore Brazil, as well as remedial tools,
completion fluids and production chemicals. Separately, Petrobras
awarded Baker Hughes a contract for seabed centrifugal pumping
systems for the Jubarte field, which is expected to support Jubarte
incremental field development and increase oil production while
reducing operating costs.
OFSE's mature assets solutions continued to see growth with
customers in other regions. The State Oil Company of Azerbaijan
Republic signed a joint cooperation agreement with Baker Hughes to
employ more than 150 electrical submersible pumps and the automated
field production solution, Leucipa™, in the nation's oilfields,
which is expected to drive optimization and efficiencies.
Industrial & Energy Technology ("IET") continued its
leadership in gas technology. In Algeria, Baker Hughes was awarded
a major Gas Technology Equipment ("GTE") contract for SONATRACH’s
Hassi R’ Mel gas field, as part of a consortium with Tecnimont
(MAIRE). For the project, Baker Hughes will provide the
turbomachinery equipment for three gas-boosting stations.
GTE also secured two major offshore topside contracts to provide
power generation systems for two innovative all-electric Floating
Production Storage and Offloading units, which will be installed
offshore in Latin America. These awards further build on IET's
positive momentum in this specific market segment in recent
years.
During the quarter, Baker Hughes signed a 10-year services frame
agreement with Woodside Energy to support LNG operations in
Australia. Gas Technology Services ("GTS") also extended a service
agreement with a major North American LNG customer and was awarded
a 25-year service agreement to support a customer's offshore
operations in Latin America.
In Asia Pacific, Baker Hughes secured a major GTE and Climate
Technology Solutions ("CTS") contract to supply electric-driven
compression and power generation technology to a global energy
operator, which is expected to enhance gas operations and power CO2
capture to reduce the carbon intensity at the customer's LNG
facility.
Baker Hughes also continues to build on its strategic global
collaboration with Air Products announced in 2021. It received
multiple orders for advanced hydrogen, syngas and CO2 solutions in
Air Products' projects across the globe. Orders secured for the
quarter also included CO2 and hydrogen compressors, as well as
pumps for one of Air Products' projects in North America.
In Germany, CTS also secured an order to provide Gasunie
Deutschland with three ICL zero-emissions integrated compressors,
providing increased compression capacity to handle the large
volumes of gas entering the network from new LNG import
terminals.
IET saw increased customer traction with its digital portfolio,
securing a multimillion-dollar Global Frame Agreement to provide bp
with an enterprise subscription for Cordant™ Asset Health, which is
expected to enable the customer to deliver reliable, efficient
condition monitoring and support its digital optimization strategy.
The agreement covers all of bp's upstream and downstream installed
base.
Consolidated Revenue and Operating Income by Reporting
Segment
(in millions) |
Three Months Ended |
|
Variance |
|
June 30,2024 |
March 31,2024 |
June 30,2023 |
|
Sequential |
Year-over-year |
Oilfield Services & Equipment |
$ |
4,011 |
|
$ |
3,783 |
|
$ |
3,877 |
|
|
6 |
% |
3 |
% |
Industrial & Energy Technology |
|
3,128 |
|
|
2,634 |
|
|
2,438 |
|
|
19 |
% |
28 |
% |
Total segment revenue |
|
7,139 |
|
|
6,418 |
|
|
6,315 |
|
|
11 |
% |
13 |
% |
Oilfield Services &
Equipment |
|
493 |
|
|
422 |
|
|
417 |
|
|
17 |
% |
18 |
% |
Industrial & Energy Technology |
|
442 |
|
|
330 |
|
|
311 |
|
|
34 |
% |
42 |
% |
Total segment operating
income |
|
935 |
|
|
752 |
|
|
728 |
|
|
24 |
% |
28 |
% |
Corporate |
|
(88 |
) |
|
(92 |
) |
|
(97 |
) |
|
4 |
% |
9 |
% |
Inventory impairment |
|
— |
|
|
— |
|
|
(15 |
) |
|
— |
% |
100 |
% |
Restructuring, impairment & other |
|
(14 |
) |
|
(7 |
) |
|
(102 |
) |
|
(95 |
%) |
87 |
% |
Operating income |
|
833 |
|
|
653 |
|
|
514 |
|
|
28 |
% |
62 |
% |
Adjusted operating
income* |
|
847 |
|
|
660 |
|
|
631 |
|
|
28 |
% |
34 |
% |
Depreciation & amortization |
|
283 |
|
|
283 |
|
|
276 |
|
|
— |
% |
3 |
% |
Adjusted EBITDA* |
$ |
1,130 |
|
$ |
943 |
|
$ |
907 |
|
|
20 |
% |
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Non-GAAP measure. See reconciliations in the
section titled "Reconciliation of GAAP to non-GAAP Financial
Measures."
"F" is used when variance is above 100%.
Additionally, "U" is used when variance is below (100)%.
Revenue for the quarter was $7,139 million, an increase of 11%
sequentially and an increase of 13% year-over-year. The increase in
revenue year-over-year was driven by higher volume in both IET and
OFSE.
The Company's total book-to-bill ratio in the quarter was 1.1;
the IET book-to-bill ratio in the quarter was also 1.1.
Operating income as determined in accordance with Generally
Accepted Accounting Principles ("GAAP"), for the second quarter of
2024 was $833 million. Operating income increased $180 million
sequentially and increased $319 million year-over-year. Total
segment operating income was $935 million for the second quarter of
2024, up 24% sequentially and up 28% year-over-year.
Adjusted operating income (a non-GAAP financial measure) for the
second quarter of 2024 was $847 million, which excludes adjustments
totaling $14 million before tax. A list of the adjusting items and
associated reconciliation from GAAP has been provided in Table 1a
in the section titled "Reconciliation of GAAP to non-GAAP Financial
Measures." Adjusted operating income for the second quarter of 2024
was up 28% sequentially and up 34% year-over-year.
Depreciation and amortization for the second quarter of 2024 was
$283 million.
Adjusted EBITDA (a non-GAAP financial measure) for the second
quarter of 2024 was $1,130 million, which excludes adjustments
totaling $14 million before tax. See Table 1b in the section titled
"Reconciliation of GAAP to non-GAAP Financial Measures." Adjusted
EBITDA for the second quarter was up 20% sequentially and up 25%
year-over-year.
The sequential increase in adjusted operating income and
adjusted EBITDA was driven by higher volume and pricing, partially
offset by negative mix in IET and OFSE. The year-over-year increase
in adjusted operating income and adjusted EBITDA was driven by
higher volume and pricing in both segments and structural cost-out
initiatives, partially offset by cost inflation and negative mix in
both segments.
Corporate costs were $88 million in the second quarter of 2024,
down 4% sequentially and down 9% year-over-year.
Other Financial Items
Remaining Performance Obligations ("RPO") in the second quarter
ended at $33.5 billion, an increase of $0.8 billion from the first
quarter of 2024. OFSE RPO was $3.3 billion, down 1% sequentially,
while IET RPO was $30.2 billion, up 3% sequentially. Within IET
RPO, GTE RPO was $11.8 billion and GTS RPO was $14.8 billion.
Income tax expense in the second quarter of 2024 was $243
million.
Other non-operating income in the second quarter of 2024 was $38
million. Included in other non-operating income were net
mark-to-market gains in fair value for certain equity investments
of $19 million.
GAAP diluted earnings per share was $0.58. Adjusted diluted
earnings per share (a non-GAAP financial measure) was $0.57.
Excluded from adjusted diluted earnings per share were all items
listed in Table 1c in the section titled "Reconciliation of GAAP to
non-GAAP Financial Measures."
Cash flow from operating activities was $348 million for the
second quarter of 2024. Free cash flow (a non-GAAP financial
measure) for the quarter was $106 million. A reconciliation from
GAAP has been provided in Table 1d in the section titled
"Reconciliation of GAAP to non-GAAP Financial Measures."
Capital expenditures, net of proceeds from disposal of assets,
were $242 million for the second quarter of 2024. Capital
expenditures, net of proceeds from disposal of assets, were $167
million for OFSE, and $65 million for IET.
Results by Reporting Segment
The following segment discussions and variance
explanations are intended to reflect management's view of the
relevant comparisons of financial results on a sequential or
year-over-year basis, depending on the business dynamics of the
reporting segments.
Oilfield Services & Equipment
(in millions) |
Three Months Ended |
|
Variance |
Segment results |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Sequential |
Year-over-year |
Orders |
$ |
4,068 |
|
$ |
3,624 |
|
$ |
4,192 |
|
|
12 |
% |
(3 |
%) |
Revenue |
$ |
4,011 |
|
$ |
3,783 |
|
$ |
3,877 |
|
|
6 |
% |
3 |
% |
Operating income |
$ |
493 |
|
$ |
422 |
|
$ |
417 |
|
|
17 |
% |
18 |
% |
Operating income margin |
|
12.3 |
% |
|
11.1 |
% |
|
10.8 |
% |
|
1.2pts |
1.5pts |
Depreciation &
amortization |
$ |
223 |
|
$ |
222 |
|
$ |
219 |
|
|
— |
% |
2 |
% |
EBITDA* |
$ |
716 |
|
$ |
644 |
|
$ |
636 |
|
|
11 |
% |
13 |
% |
EBITDA margin* |
|
17.8 |
% |
|
17.0 |
% |
|
16.4 |
% |
|
0.8pts |
1.4pts |
(in millions) |
Three Months Ended |
|
Variance |
Revenue by Product Line |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Sequential |
Year-over-year |
Well Construction |
$ |
1,090 |
$ |
1,061 |
$ |
1,076 |
|
3 |
% |
1 |
% |
Completions, Intervention
& Measurements |
|
1,118 |
|
1,006 |
|
1,090 |
|
11 |
% |
2 |
% |
Production Solutions |
|
958 |
|
945 |
|
959 |
|
1 |
% |
— |
% |
Subsea
& Surface Pressure Systems |
|
845 |
|
771 |
|
752 |
|
10 |
% |
12 |
% |
Total Revenue |
$ |
4,011 |
$ |
3,783 |
$ |
3,877 |
|
6 |
% |
3 |
% |
(in millions) |
Three Months Ended |
|
Variance |
Revenue by Geographic Region |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Sequential |
Year-over-year |
North America |
$ |
1,023 |
$ |
990 |
$ |
1,042 |
|
3 |
% |
(2 |
%) |
Latin America |
|
663 |
|
637 |
|
698 |
|
4 |
% |
(5 |
%) |
Europe/CIS/Sub-Saharan
Africa |
|
827 |
|
750 |
|
672 |
|
10 |
% |
23 |
% |
Middle East/Asia |
|
1,498 |
|
1,405 |
|
1,465 |
|
7 |
% |
2 |
% |
Total Revenue |
$ |
4,011 |
$ |
3,783 |
$ |
3,877 |
|
6 |
% |
3 |
% |
|
|
|
|
|
|
|
North America |
$ |
1,023 |
$ |
990 |
$ |
1,042 |
|
3 |
% |
(2 |
%) |
International |
|
2,988 |
|
2,793 |
|
2,835 |
|
7 |
% |
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
* Non-GAAP measure. See reconciliations in the section titled
"Reconciliation of GAAP to non-GAAP Financial Measures." EBITDA
margin is defined as EBITDA divided by revenue.
OFSE orders of $4,068 million for the second quarter increased
by $444 million sequentially. Subsea and Surface Pressure Systems
orders were $888 million, up 40% sequentially, and down 17%
year-over-year.
OFSE revenue of $4,011 million for the second quarter was up 6%
sequentially, and up 3% year-over-year.
North America revenue was $1,023 million, up 3% sequentially.
International revenue was $2,988 million, an increase of 7%
sequentially, driven by volume growth in the Middle East/Asia and
Europe/CIS/Sub-Saharan Africa regions.
Segment operating income for the second quarter was $493
million, an increase of $71 million, or 17%, sequentially. Segment
EBITDA for the second quarter was $716 million, an increase of $72
million, or 11% sequentially. The sequential increase in segment
operating income and EBITDA was primarily driven by volume and
price.
Industrial & Energy Technology
(in millions) |
Three Months Ended |
|
Variance |
Segment results |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Sequential |
Year-over-year |
Orders |
$ |
3,458 |
|
$ |
2,918 |
|
$ |
3,282 |
|
|
19 |
% |
5 |
% |
Revenue |
$ |
3,128 |
|
$ |
2,634 |
|
$ |
2,438 |
|
|
19 |
% |
28 |
% |
Operating income |
$ |
442 |
|
$ |
330 |
|
$ |
311 |
|
|
34 |
% |
42 |
% |
Operating income margin |
|
14.1 |
% |
|
12.5 |
% |
|
12.8 |
% |
|
1.6pts |
1.3pts |
Depreciation &
amortization |
$ |
55 |
|
$ |
56 |
|
$ |
52 |
|
|
(3 |
%) |
5 |
% |
EBITDA* |
$ |
497 |
|
$ |
386 |
|
$ |
363 |
|
|
29 |
% |
37 |
% |
EBITDA margin* |
|
15.9 |
% |
|
14.7 |
% |
|
14.9 |
% |
|
1.2pts |
1pts |
(in millions) |
Three Months Ended |
|
Variance |
Orders by Product Line |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Sequential |
Year-over-year |
Gas Technology Equipment |
$ |
1,493 |
$ |
1,230 |
$ |
1,547 |
|
21 |
% |
(4 |
%) |
Gas Technology Services |
|
769 |
|
692 |
|
776 |
|
11 |
% |
(1 |
%) |
Total
Gas Technology |
|
2,261 |
|
1,922 |
|
2,324 |
|
18 |
% |
(3 |
%) |
Industrial Products |
|
524 |
|
546 |
|
550 |
|
(4 |
%) |
(5 |
%) |
Industrial Solutions |
|
281 |
|
257 |
|
255 |
|
9 |
% |
10 |
% |
Controls(1) |
|
— |
|
— |
|
— |
|
— |
% |
— |
% |
Total
Industrial Technology |
|
805 |
|
803 |
|
806 |
|
— |
% |
— |
% |
Climate Technology Solutions |
|
392 |
|
193 |
|
152 |
|
F |
|
F |
|
Total Orders |
$ |
3,458 |
$ |
2,918 |
$ |
3,282 |
|
19 |
% |
5 |
% |
(in millions) |
Three Months Ended |
|
Variance |
Revenue by Product Line |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Sequential |
Year-over-year |
Gas Technology Equipment |
$ |
1,539 |
$ |
1,210 |
$ |
968 |
|
27 |
% |
59 |
% |
Gas Technology Services |
|
691 |
|
614 |
|
658 |
|
13 |
% |
5 |
% |
Total
Gas Technology |
|
2,230 |
|
1,824 |
|
1,626 |
|
22 |
% |
37 |
% |
Industrial Products |
|
509 |
|
462 |
|
506 |
|
10 |
% |
1 |
% |
Industrial Solutions |
|
262 |
|
265 |
|
242 |
|
(1 |
%) |
8 |
% |
Controls(1) |
|
— |
|
— |
|
1 |
|
— |
% |
U |
|
Total
Industrial Technology |
|
770 |
|
727 |
|
749 |
|
6 |
% |
3 |
% |
Climate Technology Solutions |
|
128 |
|
83 |
|
62 |
|
54 |
% |
F |
|
Total Revenue |
$ |
3,128 |
$ |
2,634 |
$ |
2,438 |
|
19 |
% |
28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
* Non-GAAP measure. See reconciliations in the section titled
"Reconciliation of GAAP to non-GAAP Financial Measures." EBITDA
margin is defined as EBITDA divided by revenue.
"F" is used when variance is above 100%.
Additionally, "U" is used when variance is below (100)%.
(1) The sale of our controls business was completed in
April 2023.
IET orders of $3,458 million for the second quarter increased by
$177 million, or 5% year-over-year. The increase was driven
primarily by Climate Technology Solutions orders which were up $240
million year-over-year.
IET revenue of $3,128 million for the quarter increased $691
million, or 28% year-over-year. The increase was driven primarily
by GTE, up $571 million or 59% year-over-year.
Segment operating income for the quarter was $442 million, up
42% year-over-year. Segment EBITDA for the quarter was $497
million, up $133 million, or 37% year-over-year. The year-over-year
increase in segment operating income and EBITDA was primarily
driven by higher volume, pricing and productivity, partially offset
by unfavorable mix as a result of higher GTE growth and cost
inflation.
Reconciliation of GAAP to non-GAAP
Financial Measures
Management provides non-GAAP financial measures because it
believes such measures are widely accepted financial indicators
used by investors and analysts to analyze and compare companies on
the basis of operating performance (including adjusted operating
income; EBITDA; EBITDA margin; adjusted EBITDA; adjusted net income
attributable to Baker Hughes; and adjusted diluted earnings per
share) and liquidity (free cash flow) and that these measures may
be used by investors to make informed investment decisions.
Management believes that the exclusion of certain identified items
from several key operating performance measures enables us to
evaluate our operations more effectively, to identify underlying
trends in the business, and to establish operational goals for
certain management compensation purposes. Management also believes
that free cash flow is an important supplemental measure of our
cash performance but should not be considered as a measure of
residual cash flow available for discretionary purposes, or as an
alternative to cash flow from operating activities presented in
accordance with GAAP.
Table 1a. Reconciliation of GAAP and Adjusted Operating
Income
|
Three Months Ended |
(in
millions) |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
Operating income (GAAP) |
$ |
833 |
$ |
653 |
$ |
514 |
Restructuring, impairment & other |
|
14 |
|
7 |
|
102 |
Inventory impairment |
|
— |
|
— |
|
15 |
Total
operating income adjustments |
|
14 |
|
7 |
|
117 |
Adjusted operating income (non-GAAP) |
$ |
847 |
$ |
660 |
$ |
631 |
|
|
|
|
|
|
|
Table 1a reconciles operating income, which is the directly
comparable financial result determined in accordance with GAAP, to
adjusted operating income. Adjusted operating income excludes the
impact of certain identified items.
Table 1b. Reconciliation of Net Income Attributable to
Baker Hughes to EBITDA and Adjusted EBITDA
|
Three Months Ended |
(in
millions) |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
Net income attributable to Baker Hughes (GAAP) |
$ |
579 |
|
$ |
455 |
|
$ |
410 |
|
Net income attributable to
noncontrolling interests |
|
2 |
|
|
8 |
|
|
4 |
|
Provision for income
taxes |
|
243 |
|
|
178 |
|
|
200 |
|
Interest expense, net |
|
47 |
|
|
41 |
|
|
58 |
|
Other
non-operating income, net |
|
(38 |
) |
|
(29 |
) |
|
(158 |
) |
Operating income (GAAP) |
|
833 |
|
|
653 |
|
|
514 |
|
|
|
|
|
Depreciation & amortization |
|
283 |
|
|
283 |
|
|
276 |
|
EBITDA (non-GAAP) |
|
1,116 |
|
|
936 |
|
|
790 |
|
Total
operating income adjustments(1) |
|
14 |
|
|
7 |
|
|
117 |
|
Adjusted EBITDA (non-GAAP) |
$ |
1,130 |
|
$ |
943 |
|
$ |
907 |
|
|
|
|
|
|
|
|
|
|
|
(1) See Table 1a for the identified adjustments to
operating income.
Table 1b reconciles net income attributable to Baker Hughes,
which is the directly comparable financial result determined in
accordance with GAAP, to EBITDA (a non-GAAP financial measure).
Adjusted EBITDA excludes the impact of certain identified
items.
Table 1c. Reconciliation of Net Income Attributable to
Baker Hughes to Adjusted Net Income Attributable to Baker
Hughes
|
Three Months Ended |
(in
millions, except per share amounts) |
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
Net income attributable to Baker Hughes (GAAP) |
$ |
579 |
|
$ |
455 |
|
$ |
410 |
|
Total operating income
adjustments (1) |
|
14 |
|
|
7 |
|
|
117 |
|
Other adjustments
(non-operating) (2) |
|
(19 |
) |
|
(27 |
) |
|
(156 |
) |
Tax
adjustments (3) |
|
(6 |
) |
|
(6 |
) |
|
24 |
|
Total adjustments, net of
income tax |
|
(11 |
) |
|
(26 |
) |
|
(15 |
) |
Less:
adjustments attributable to noncontrolling interests |
|
— |
|
|
— |
|
|
— |
|
Adjustments attributable to Baker Hughes |
|
(11 |
) |
|
(26 |
) |
|
(15 |
) |
Adjusted net income attributable to Baker Hughes (non-GAAP) |
$ |
568 |
|
$ |
429 |
|
$ |
395 |
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
Weighted-average shares of Class A common stock outstanding
diluted |
|
1,001 |
|
|
1,004 |
|
|
1,015 |
|
Adjusted earnings per share - diluted (non-GAAP) |
$ |
0.57 |
|
$ |
0.43 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
(1) See Table 1a for the identified adjustments to
operating income.
(2) All periods primarily reflect the net gain or loss on
changes in fair value for certain equity investments.
(3) All periods reflect the tax associated with the other
operating and non-operating adjustments.
Table 1c reconciles net income attributable to Baker Hughes,
which is the directly comparable financial result determined in
accordance with GAAP, to adjusted net income attributable to Baker
Hughes (a non-GAAP financial measure). Adjusted net income
attributable to Baker Hughes excludes the impact of certain
identified items.
Table 1d. Reconciliation of Net Cash Flows From
Operating Activities to Free Cash Flow
|
Three Months Ended |
(in
millions) |
June 30,2024 |
March 31,2024 |
June 30,2023 |
Net cash flows from operating activities (GAAP) |
$ |
348 |
|
$ |
784 |
|
$ |
858 |
|
Add:
cash used for capital expenditures, net of proceeds from disposal
of assets |
|
(242 |
) |
|
(282 |
) |
|
(235 |
) |
Free
cash flow (non-GAAP) |
$ |
106 |
|
$ |
502 |
|
$ |
623 |
|
|
|
|
|
|
|
|
|
|
|
Table 1d reconciles net cash flows from operating activities,
which is the directly comparable financial result determined in
accordance with GAAP, to free cash flow. Free cash flow is defined
as net cash flows from operating activities less expenditures for
capital assets plus proceeds from disposal of assets.
Financial
Tables (GAAP) |
Condensed
Consolidated Statements of Income (Loss) |
(Unaudited) |
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
(In
millions, except per share amounts) |
2024 |
2023 |
2024 |
2023 |
Revenue |
$ |
7,139 |
|
$ |
6,315 |
|
$ |
13,557 |
|
$ |
12,030 |
|
Costs and expenses: |
|
|
|
|
Cost of revenue |
|
5,649 |
|
|
5,004 |
|
|
10,789 |
|
|
9,569 |
|
Selling, general and administrative |
|
643 |
|
|
695 |
|
|
1,261 |
|
|
1,351 |
|
Restructuring, impairment and other |
|
14 |
|
|
102 |
|
|
21 |
|
|
158 |
|
Total costs and expenses |
|
6,306 |
|
|
5,801 |
|
|
12,071 |
|
|
11,078 |
|
Operating income |
|
833 |
|
|
514 |
|
|
1,486 |
|
|
952 |
|
Other non-operating income,
net |
|
38 |
|
|
158 |
|
|
67 |
|
|
544 |
|
Interest expense, net |
|
(47 |
) |
|
(58 |
) |
|
(88 |
) |
|
(122 |
) |
Income before income
taxes |
|
824 |
|
|
614 |
|
|
1,465 |
|
|
1,374 |
|
Provision for income taxes |
|
(243 |
) |
|
(200 |
) |
|
(421 |
) |
|
(379 |
) |
Net income |
|
581 |
|
|
414 |
|
|
1,044 |
|
|
995 |
|
Less: Net income attributable to noncontrolling interests |
|
2 |
|
|
4 |
|
|
10 |
|
|
10 |
|
Net
income attributable to Baker Hughes Company |
$ |
579 |
|
$ |
410 |
|
$ |
1,034 |
|
$ |
985 |
|
|
|
|
|
|
Per share
amounts: |
|
|
|
Basic income per Class A
common stock |
$ |
0.58 |
|
$ |
0.41 |
|
$ |
1.04 |
|
$ |
0.98 |
|
Diluted income per Class A
common stock |
$ |
0.58 |
|
$ |
0.40 |
|
$ |
1.03 |
|
$ |
0.97 |
|
|
|
|
|
|
Weighted average shares: |
|
|
|
|
Class A basic |
|
996 |
|
|
1,010 |
|
|
997 |
|
|
1,010 |
|
Class A diluted |
|
1,001 |
|
|
1,015 |
|
|
1,002 |
|
|
1,016 |
|
|
|
|
|
|
Cash dividend per Class A
common stock |
$ |
0.21 |
|
$ |
0.19 |
|
$ |
0.42 |
|
$ |
0.38 |
|
|
|
|
|
|
Condensed
Consolidated Statements of Financial Position |
(Unaudited) |
|
|
|
(In
millions) |
June 30, 2024 |
December 31, 2023 |
ASSETS |
Current Assets: |
|
|
Cash and cash equivalents |
$ |
2,284 |
$ |
2,646 |
Current receivables, net |
|
7,051 |
|
7,075 |
Inventories, net |
|
5,126 |
|
5,094 |
All other current assets |
|
1,469 |
|
1,486 |
Total current assets |
|
15,930 |
|
16,301 |
Property, plant and equipment,
less accumulated depreciation |
|
4,951 |
|
4,893 |
Goodwill |
|
6,105 |
|
6,137 |
Other intangible assets,
net |
|
4,019 |
|
4,093 |
Contract and other deferred
assets |
|
1,868 |
|
1,756 |
All
other assets |
|
3,783 |
|
3,765 |
Total
assets |
$ |
36,656 |
$ |
36,945 |
LIABILITIES AND EQUITY |
Current Liabilities: |
|
|
Accounts payable |
$ |
4,649 |
$ |
4,471 |
Short-term and current portion of long-term debt |
|
34 |
|
148 |
Progress collections and deferred income |
|
5,506 |
|
5,542 |
All other current liabilities |
|
2,397 |
|
2,830 |
Total current liabilities |
|
12,586 |
|
12,991 |
Long-term debt |
|
5,861 |
|
5,872 |
Liabilities for pensions and
other postretirement benefits |
|
984 |
|
978 |
All other liabilities |
|
1,504 |
|
1,585 |
Equity |
|
15,721 |
|
15,519 |
Total
liabilities and equity |
$ |
36,656 |
$ |
36,945 |
|
|
|
Outstanding Baker Hughes
Company shares: |
|
|
Class A common stock |
|
993 |
|
998 |
|
|
|
|
|
Condensed Consolidated Statements of Cash
Flows |
(Unaudited) |
|
|
Three MonthsEndedJune
30, |
Six Months EndedJune 30, |
(In
millions) |
2024 |
2024 |
2023 |
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
581 |
|
$ |
1,044 |
|
$ |
995 |
|
Adjustments to reconcile net
income to net cash flows from operating activities: |
|
|
|
Depreciation and amortization |
|
283 |
|
|
566 |
|
|
545 |
|
Stock-based compensation cost |
|
50 |
|
|
101 |
|
|
98 |
|
Gain on equity securities |
|
(19 |
) |
|
(71 |
) |
|
(540 |
) |
Provision for deferred income taxes |
|
57 |
|
|
33 |
|
|
110 |
|
Other asset impairments |
|
— |
|
|
— |
|
|
33 |
|
Working capital |
|
(245 |
) |
|
(36 |
) |
|
176 |
|
Other operating items, net |
|
(359 |
) |
|
(505 |
) |
|
(97 |
) |
Net
cash flows from operating activities |
|
348 |
|
|
1,132 |
|
|
1,320 |
|
Cash flows from investing
activities: |
|
|
|
Expenditures for capital assets |
|
(292 |
) |
|
(625 |
) |
|
(587 |
) |
Proceeds from disposal of assets |
|
50 |
|
|
101 |
|
|
87 |
|
Proceeds from business dispositions |
|
— |
|
|
— |
|
|
293 |
|
Net cash paid for acquisitions |
|
— |
|
|
— |
|
|
(282 |
) |
Other investing items, net |
|
(19 |
) |
|
(6 |
) |
|
75 |
|
Net
cash flows used in investing activities |
|
(261 |
) |
|
(530 |
) |
|
(414 |
) |
Cash flows from financing
activities: |
|
|
|
Repayment of long-term debt |
|
(117 |
) |
|
(125 |
) |
|
— |
|
Dividends paid |
|
(209 |
) |
|
(419 |
) |
|
(384 |
) |
Repurchase of Class A common stock |
|
(166 |
) |
|
(324 |
) |
|
(99 |
) |
Other financing items, net |
|
(10 |
) |
|
(61 |
) |
|
(67 |
) |
Net
cash flows used in financing activities |
|
(502 |
) |
|
(929 |
) |
|
(550 |
) |
Effect
of currency exchange rate changes on cash and cash equivalents |
|
(18 |
) |
|
(35 |
) |
|
(39 |
) |
Increase (decrease) in cash
and cash equivalents |
|
(433 |
) |
|
(362 |
) |
|
317 |
|
Cash
and cash equivalents, beginning of period |
|
2,717 |
|
|
2,646 |
|
|
2,488 |
|
Cash
and cash equivalents, end of period |
$ |
2,284 |
|
$ |
2,284 |
|
$ |
2,805 |
|
Supplemental cash flows
disclosures: |
|
|
|
Income taxes paid, net of refunds |
$ |
228 |
|
$ |
336 |
|
$ |
323 |
|
Interest paid |
$ |
102 |
|
$ |
150 |
|
$ |
157 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Financial Information
Supplemental financial information can be found on the Company's
website at: investors.bakerhughes.com in the Financial Information
section under Quarterly Results.
Conference Call and Webcast
The Company has scheduled an investor conference call to discuss
management's outlook and the results reported in today's earnings
announcement. The call will begin at 9:30 a.m. Eastern time,
8:30 a.m. Central time on Friday, July 26, 2024, the content
of which is not part of this earnings release. The conference call
will be broadcast live via a webcast and can be accessed by
visiting the Events and Presentations page on the Company's website
at: investors.bakerhughes.com. An archived version of the webcast
will be available on the website for one month following the
webcast.
Forward-Looking Statements
This news release (and oral statements made regarding the
subjects of this release) may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, (each a "forward-looking statement"). 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. There are many risks and uncertainties that could
cause actual results to differ materially from our forward-looking
statements. These forward-looking statements are also affected by
the risk factors described in the Company's annual report on Form
10-K for the annual period ended December 31, 2023 and those set
forth from time to time in other filings with the Securities and
Exchange Commission ("SEC"). The documents are available through
the Company's website at: www.investors.bakerhughes.com or through
the SEC's Electronic Data Gathering and Analysis Retrieval system
at: www.sec.gov. We undertake no obligation to publicly update or
revise any forward-looking statement, except as required by law.
Readers are cautioned not to place undue reliance on any of these
forward-looking statements.
Our expectations regarding our business outlook and business
plans; the business plans of our customers; oil and natural gas
market conditions; cost and availability of resources; economic,
legal and regulatory conditions, and other matters are only our
forecasts regarding these matters.
These forward-looking statements, including forecasts, may be
substantially different from actual results, which are affected by
many risks, along with the following risk factors and the timing of
any of these risk factors:
- Economic and political conditions - the impact of worldwide
economic conditions and rising inflation; the effect that declines
in credit availability may have on worldwide economic growth and
demand for hydrocarbons; foreign currency exchange fluctuations and
changes in the capital markets in locations where we operate; and
the impact of government disruptions and sanctions.
- Orders and RPO - our ability to execute on orders and RPO in
accordance with agreed specifications, terms and conditions and
convert those orders and RPO to revenue and cash.
- Oil and gas market conditions - the level of petroleum industry
exploration, development and production expenditures; the price of,
volatility in pricing of, and the demand for crude oil and natural
gas; drilling activity; drilling permits for and regulation of the
shelf and the deepwater drilling; excess productive capacity; crude
and product inventories; liquefied natural gas supply and demand;
seasonal and other adverse weather conditions that affect the
demand for energy; severe weather conditions, such as tornadoes and
hurricanes, that affect exploration and production activities;
Organization of Petroleum Exporting Countries ("OPEC") policy and
the adherence by OPEC nations to their OPEC production quotas.
- Terrorism and geopolitical risks - war, military action,
terrorist activities or extended periods of international conflict,
particularly involving any petroleum-producing or consuming
regions, including Russia and Ukraine; and the recent conflict in
the Middle East; labor disruptions, civil unrest or security
conditions where we operate; potentially burdensome taxation,
expropriation of assets by governmental action; cybersecurity risks
and cyber incidents or attacks; epidemic outbreaks.
About Baker Hughes:
Baker Hughes (Nasdaq: BKR) is an energy technology company that
provides solutions for energy and industrial customers worldwide.
Built on a century of experience and conducting business in over
120 countries, our innovative technologies and services are taking
energy forward - making it safer, cleaner and more efficient for
people and the planet. Visit us at bakerhughes.com
For more information, please contact:
Investor Relations
Chase Mulvehill+1
346-297-2561investor.relations@bakerhughes.com
Media Relations
Thomas Millas+1 346-415-0320thomas.millas@bakerhughes.com
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