Baker Hughes Company Announces Third Quarter 2022 Results
Baker Hughes Company (BKR) reported Q3 2022 results with orders reaching $6.1 billion, a 3% sequential and 13% year-over-year increase. Revenue stood at $5.4 billion, up 6% sequentially and 5% year-over-year. The company recorded a GAAP operating income of $269 million, up $294 million sequentially but down $110 million YoY. Adjusted operating income rose 34% sequentially to $503 million. Free cash flow was $417 million. Baker Hughes aims to enhance operational efficiency through restructuring, targeting at least $150 million in cost savings.
- Orders increased by 3% sequentially and 13% year-over-year to $6.1 billion.
- Revenue rose by 6% sequentially and 5% year-over-year to $5.4 billion.
- Adjusted operating income increased 34% sequentially, reaching $503 million.
- Free cash flow reached $417 million, indicating strong cash generation.
- GAAP operating income decreased by $110 million year-over-year to $269 million.
- GAAP loss per share was $(0.02), reflecting underlying financial challenges.
- Lower revenue in Turbomachinery & Process Solutions and Oilfield Equipment segments.
- Orders of
$6.1 billion for the quarter, up3% sequentially and up13% year-over-year. - Revenue of
$5.4 billion for the quarter, up6% sequentially and up5% year-over-year. - GAAP operating income of
$269 million for the quarter, up$294 million sequentially and down$110 million year-over-year. - Adjusted operating income (a non-GAAP measure) of
$503 million for the quarter, up34% sequentially and up25% year-over-year. - Adjusted EBITDA* (a non-GAAP measure) of
$758 million for the quarter, up16% sequentially and up14% year-over-year. - GAAP loss per share of
$(0.02) for the quarter which included$0.28 per share of adjusting items. Adjusted earnings per share (a non-GAAP measure) was$0.26 . - Cash flows generated from operating activities were
$597 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was$417 million .
The Company presents its financial results in accordance with GAAP. However, management believes that using additional non-GAAP measures will enhance the evaluation of the profitability of the Company and its ongoing operations. Please see reconciliations in the section entitled "Reconciliation of GAAP to non-GAAP Financial Measures." Certain columns and rows in our tables and financial statements may not sum up due to the use of rounded numbers.
*Adjusted EBITDA (a non-GAAP measure) is defined as operating income (loss) excluding depreciation & amortization and operating income adjustments.
LONDON and HOUSTON, Oct. 19, 2022 (GLOBE NEWSWIRE) -- Baker Hughes Company (Nasdaq: BKR) ("Baker Hughes" or the "Company") announced results today for the third quarter of 2022.
| Three Months Ended | Variance | ||||||||||
| (in millions except per share amounts) | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | ||||||
| Orders | $ | 6,063 | $ | 5,860 | $ | 5,378 | |||||
| Revenue | 5,369 | 5,047 | 5,093 | ||||||||
| Operating income (loss) | 269 | (25 | ) | 378 | F | (29)% | |||||
| Adjusted operating income (non-GAAP) | 503 | 376 | 402 | ||||||||
| Adjusted EBITDA (non-GAAP) | 758 | 651 | 664 | ||||||||
| Net income (loss) attributable to Baker Hughes | (17 | ) | (839 | ) | 8 | U | |||||
| Adjusted net income (non-GAAP) attributable to Baker Hughes | 264 | 114 | 141 | F | |||||||
| EPS attributable to Class A shareholders | (0.02 | ) | (0.84 | ) | 0.01 | U | |||||
| Adjusted EPS (non-GAAP) attributable to Class A shareholders | 0.26 | 0.11 | 0.16 | F | |||||||
| Cash flow from operating activities | 597 | 321 | 416 | ||||||||
| Free cash flow (non-GAAP) | 417 | 147 | 305 | F | |||||||
"F" is used in most instances when variance is above
“We were generally pleased with our third quarter results, with strong performance in OFS while TPS successfully managed multiple challenges. We also saw strong orders performance, with continued momentum in OFE as well as TPS. 2022 has presented some unique challenges for Baker Hughes, and as we head towards 2023 we believe many of the key challenges should be behind us. I would like to thank our team for their continued commitment to deliver for our customers and execute our strategy,” said Lorenzo Simonelli, Baker Hughes chairman and chief executive officer.
“The macro outlook has grown increasingly uncertain as the global economy is dealing with strong inflationary pressures, a rising interest rate environment, and sizeable fluctuations in global currencies. Despite these economic challenges, we remain positive on the outlook for oil and gas. We believe the fundamentals remain supportive of a multi-year upturn in global upstream spending, and that elevated natural gas and LNG pricing remains constructive for future FIDs. On the new energy front, recent policy movements in Europe and the U.S. are likely to help support a significant increase in clean energy development.”
“Given the dynamic macro backdrop, Baker Hughes is focusing on preparing for a range of scenarios and executing on what is within our control. Last month, we announced a restructuring and re-segmentation of the company into two reporting segments, OFSE and IET. These changes are designed to sharpen our focus, improve operational execution and better position Baker Hughes to capitalize on the quickly changing energy markets. Importantly, we expect these changes to increase shareholder value as we continue to invest in our portfolio for new energy and long-term growth opportunities,” concluded Simonelli.
Quarter Highlights
Supporting our Customers
The OFS segment was awarded a Wireline Services contract by Petrobras to support offshore operations. The contract allows Baker Hughes to introduce several new well construction technologies to the region, including RCX™ Magna large area multi-probe sampling, SureVIEW™ DAS, which provides comprehensive exploratory formation evaluation data, and Downhole Electric Cutting Tool (DECT) pipe cutting service.
OFS’ Wireline Services product line was also awarded a three-year contract by Sonatrach in Algeria, leveraging our deep understanding of the customer’s needs and positioning OFS as the leading wireline provider in the country.
OFS continued to drive interest in its digital portfolio of solutions. A major North American operator awarded Baker Hughes a contract to perform an offline analysis on 60 wells in the Permian and Delaware basins using ProductionLink – Predictive Failure Analytics (PFA). ProductionLink PFA software transforms the way customers manage production operations by adding significant value for electrical submersible pumps’ run life extension, operations and inventory planning, and maximizing overall lift performance.
The TPS segment saw continued growth in LNG. TPS secured another contract for two additional New Fortress Energy’s (NFE) “Fast LNG” projects, supplying two main refrigerant turbocompressor strings. Each turbocompressor will feature one LM6000PF+ gas turbine, and the technology will be deployed in various offshore projects across the globe, helping to increase overall LNG supply.
TPS announced a new outcome-based services contract for the maintenance and monitoring of turbomachinery equipment operations at Coral Sul FLNG, the first deep-water floating LNG facility operating off the coast of Mozambique for the ENI-led Coral South project. This new service agreement builds on an existing contract awarded to Baker Hughes in 2017 for the project’s power and gas refrigeration process. As part of the scope, Baker Hughes will fully leverage its growing digital capabilities by providing remote monitoring and diagnostics services, as well as a suite of other services based on Bently Nevada’s System 1 technology.
TPS also secured a contract in Saudi Arabia to supply 12 electric motor driven compressors to support gas processing for Aramco’s Jafurah unconventional gas field project, the largest non-associated gas field in the country. This contract follows a previous contract awarded to TPS in the second quarter, bringing a total of 26 compressor trains supplied by Baker Hughes to the Jafurah project.
OFE’s Flexible Pipes Systems (FPS) product line saw a third-straight quarter of record orders. OFE secured several long-term contracts with operators in multiple regions, including Brazil and Asia, to provide flexible pipes for offshore projects, reflecting FPS’ strong technology capabilities.
The DS segment continued to see interest in its industrial asset management solutions. Bently Nevada secured multiple contracts supporting customers’ digital transformation across their operations. In Europe, the business secured a milestone, multi-year Software as a Service contract, expanding Bently Nevada’s existing scope to deliver plantwide software across the customer’s entire installed base. In the Middle East, Bently Nevada secured a contract with a major national oil company to extend asset condition monitoring hardware and software across three offshore platforms while centralizing and connecting data back to the customer’s onshore operations center. The contract includes 3500 and TDI hardware modules, System 1 servers, and cyber security protection.
Executing on Priorities and Leading with Innovation
During the quarter, Baker Hughes announced that it is restructuring and simplifying its organization and accelerating its strategic transformation. Baker Hughes is restructuring its four product companies to focus on two reporting business segments and streamlining its corporate structure, which is expected to deliver at least
TPS also continued to support the growth of the hydrogen economy, securing two contracts with Air Products to supply advanced compression and steam turbine generator technologies for the net-zero hydrogen energy complex in Edmonton, Alberta, Canada, as well as the NEOM carbon-free hydrogen project in Saudi Arabia. In Edmonton, Baker Hughes will supply its high-pressure ratio compressor technology for hydrogen compression, enabling a significant reduction of compressor footprint due to its unique design and power density. These orders are part of the companies’ previously announced hydrogen collaboration framework in 2021.
An investment into graphene production technology company Levidian will provide Baker Hughes with an entry point into the promising market of graphene production, a game-changing additive for many materials. Levidian’s technology stands out with the ability to produce a high-quality type of graphene in large volumes. A wide range of methane and fugitive gas streams can be decarbonized by conversion into graphene and hydrogen which can then be used to decarbonize hard-to-abate industries.
In August, TPS announced the acquisition of the Power Generation division of BRUSH group to enhance its electric machinery portfolio. The acquisition was completed in early October. BRUSH’s technology is already in use across a wide range of industries and complements Baker Hughes’ existing e-LNG offering, supporting the Company’s strategic commitment to provide lower carbon solutions.
Consolidated Results by Reporting Segment
Consolidated Orders by Reporting Segment
| (in millions) | Three Months Ended | Variance | |||||||||
| Consolidated segment orders | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | ||||||
| Oilfield Services | $ | 2,832 | $ | 2,669 | $ | 2,412 | 6 | % | 17 | % | |
| Oilfield Equipment | 874 | 723 | 724 | 21 | % | 21 | % | ||||
| Turbomachinery & Process Solutions | 1,810 | 1,858 | 1,719 | (3 | )% | 5 | % | ||||
| Digital Solutions | 547 | 609 | 523 | (10 | )% | 5 | % | ||||
| Total | $ | 6,063 | $ | 5,860 | $ | 5,378 | 3 | % | 13 | % | |
Orders for the quarter were
Year-over-year, the increase in orders was a result of higher order intake in all segments. Year-over-year equipment orders were up
The Company's total book-to-bill ratio in the quarter was 1.1; the equipment book-to-bill ratio in the quarter was 1.3.
Remaining Performance Obligations (RPO) in the third quarter ended at
Consolidated Revenue by Reporting Segment
| (in millions) | Three Months Ended | Variance | |||||||||
| Consolidated segment revenue | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | ||||||
| Oilfield Services | $ | 2,842 | $ | 2,689 | $ | 2,419 | 6 | % | 17 | % | |
| Oilfield Equipment | 561 | 541 | 603 | 4 | % | (7 | )% | ||||
| Turbomachinery & Process Solutions | 1,438 | 1,293 | 1,562 | 11 | % | (8 | )% | ||||
| Digital Solutions | 528 | 524 | 510 | 1 | % | 4 | % | ||||
| Total | $ | 5,369 | $ | 5,047 | $ | 5,093 | 6 | % | 5 | % | |
Revenue for the quarter was
Compared to the same quarter last year, revenue was up
Consolidated Operating Income by Reporting Segment
| (in millions) | Three Months Ended | Variance | ||||||||||||
| Segment operating income | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | |||||||||
| Oilfield Services | $ | 330 | $ | 261 | $ | 190 | 27 | % | 74 | % | ||||
| Oilfield Equipment | (6 | ) | (12 | ) | 14 | 50 | % | U | ||||||
| Turbomachinery & Process Solutions | 262 | 218 | 278 | 20 | % | (6 | )% | |||||||
| Digital Solutions | 20 | 18 | 26 | 11 | % | (22 | )% | |||||||
| Total segment operating income | 606 | 485 | 508 | 25 | % | 19 | % | |||||||
| Corporate | (103 | ) | (108 | ) | (105 | ) | 5 | % | 2 | % | ||||
| Inventory impairment | — | (31 | ) | — | F | F | ||||||||
| Restructuring, impairment & other | (230 | ) | (362 | ) | (14 | ) | 37 | % | U | |||||
| Separation related | (5 | ) | (9 | ) | (11 | ) | 44 | % | 53 | % | ||||
| Operating income (loss) | 269 | (25 | ) | 378 | F | (29 | )% | |||||||
| Adjusted operating income* | 503 | 376 | 402 | 34 | % | 25 | % | |||||||
| Depreciation & amortization | 254 | 275 | 262 | (7 | )% | (3 | )% | |||||||
| Adjusted EBITDA* | $ | 758 | $ | 651 | $ | 664 | 16 | % | 14 | % | ||||
*Non-GAAP measure.
"F" is used in most instances when variance is above
On a GAAP basis, operating income for the third quarter of 2022 was
Adjusted operating income (a non-GAAP measure) for the third quarter of 2022 was
Depreciation and amortization for the third quarter of 2022 was
Adjusted EBITDA (a non-GAAP measure) for the third quarter of 2022 was
Corporate costs were
Other Financial Items
Income tax expense in the third quarter of 2022 was
Other non-operating loss in the third quarter of 2022 was
GAAP loss per share was
Cash flow from operating activities was
Capital expenditures, net of proceeds from disposal of assets, were
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
| (in millions) | Three Months Ended | Variance | ||||||||||||
| Oilfield Services | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | |||||||||
| Revenue | $ | 2,842 | $ | 2,689 | $ | 2,419 | 6 | % | 17 | % | ||||
| Operating income | $ | 330 | $ | 261 | $ | 190 | 27 | % | 74 | % | ||||
| Operating income margin | 11.6 | % | 9.7 | % | 7.9 | % | 1.9 | pts | 3.8 | pts | ||||
| Depreciation & amortization | $ | 185 | $ | 201 | $ | 183 | (8 | )% | 1 | % | ||||
| EBITDA* | $ | 515 | $ | 462 | $ | 373 | 12 | % | 38 | % | ||||
| EBITDA margin* | 18.1 | % | 17.2 | % | 15.4 | % | 1 | pt | 2.7pts | |||||
Oilfield Services (OFS) revenue of
North America revenue was
Segment operating income before tax for the quarter was
Oilfield Equipment
| (in millions) | Three Months Ended | Variance | ||||||||||||
| Oilfield Equipment | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | |||||||||
| Orders | $ | 874 | $ | 723 | $ | 724 | 21 | % | 21 | % | ||||
| Revenue | $ | 561 | $ | 541 | $ | 603 | 4 | % | (7 | )% | ||||
| Operating income (loss) | $ | (6 | ) | $ | (12 | ) | $ | 14 | 50 | % | U | |||
| Operating income margin | (1.1 | )% | (2.3 | )% | 2.3 | % | 1.2 | pts | (3.4 | )pts | ||||
| Depreciation & amortization | $ | 20 | $ | 20 | $ | 22 | (3 | )% | (13 | )% | ||||
| EBITDA* | $ | 13 | $ | 8 | $ | 36 | 72 | % | (63 | )% | ||||
| EBITDA margin* | 2.4 | % | 1.4 | % | 6.0 | % | 0.9 | pts | (3.6)pts | |||||
Oilfield Equipment (OFE) orders of
*Non-GAAP measure.
OFE revenue of
Segment operating loss before tax for the quarter was
Turbomachinery & Process Solutions
| (in millions) | Three Months Ended | Variance | ||||||||||||
| Turbomachinery & Process Solutions | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | |||||||||
| Orders | $ | 1,810 | $ | 1,858 | $ | 1,719 | (3 | )% | 5 | % | ||||
| Revenue | $ | 1,438 | $ | 1,293 | $ | 1,562 | 11 | % | (8 | )% | ||||
| Operating income | $ | 262 | $ | 218 | $ | 278 | 20 | % | (6 | )% | ||||
| Operating income margin | 18.2 | % | 16.8 | % | 17.8 | % | 1.4 | pts | 0.4 | pts | ||||
| Depreciation & amortization | $ | 28 | $ | 29 | $ | 30 | (3 | )% | (4 | )% | ||||
| EBITDA* | $ | 290 | $ | 247 | $ | 308 | 18 | % | (6 | )% | ||||
| EBITDA margin* | 20.2 | % | 19.1 | % | 19.7 | % | 1.1 | pts | 0.5 | pts | ||||
Turbomachinery & Process Solutions (TPS) orders of
TPS revenue of
Segment operating income before tax for the quarter was
*Non-GAAP measure.
Digital Solutions
| (in millions) | Three Months Ended | Variance | ||||||||||||
| Digital Solutions | September 30, 2022 | June 30, 2022 | September 30, 2021 | Sequential | Year-over-year | |||||||||
| Orders | $ | 547 | $ | 609 | $ | 523 | (10 | )% | 5 | % | ||||
| Revenue | $ | 528 | $ | 524 | $ | 510 | 1 | % | 4 | % | ||||
| Operating income | $ | 20 | $ | 18 | $ | 26 | 11 | % | (22 | )% | ||||
| Operating income margin | 3.8 | % | 3.4 | % | 5.1 | % | 0.4 | pts | (1.3 | )pts | ||||
| Depreciation & amortization | $ | 16 | $ | 20 | $ | 22 | (18 | )% | (27 | )% | ||||
| EBITDA* | $ | 36 | $ | 38 | $ | 48 | (4 | )% | (24 | )% | ||||
| EBITDA margin* | 6.9 | % | 7.2 | % | 9.4 | % | (0.4 | )pts | (2.5 | )pts | ||||
Digital Solutions (DS) orders of
Digital Solutions revenue of
Segment operating income before tax for the quarter was
*Non-GAAP measure.
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 and liquidity, and that these measures may be used by investors to make informed investment decisions.
Table 1a. Reconciliation of GAAP and Adjusted Operating Income/(Loss)
| Three Months Ended | |||||||
| (in millions) | September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||
| Operating income (loss) (GAAP) | $ | 269 | $ | (25 | ) | $ | 378 |
| Separation related | 5 | 9 | 11 | ||||
| Restructuring, impairment & other | 230 | 362 | 14 | ||||
| Inventory impairment | — | 31 | — | ||||
| Total operating income adjustments | 235 | 402 | 24 | ||||
| Adjusted operating income (non-GAAP) | $ | 503 | $ | 376 | $ | 402 | |
Table 1a reconciles operating income (loss), which is the directly comparable financial result determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted operating income (a non-GAAP financial measure). Adjusted operating income excludes the impact of certain identified items.
Table 1b. Reconciliation of Net Income (Loss) Attributable to Baker Hughes to EBITDA and Adjusted EBITDA
| Three Months Ended | ||||||||
| (in millions) | September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||
| Net income (loss) attributable to Baker Hughes (GAAP) | $ | (17 | ) | $ | (839 | ) | $ | 8 |
| Net income attributable to noncontrolling interests | 8 | 2 | 8 | |||||
| Provision for income taxes | 153 | 182 | 193 | |||||
| Interest expense, net | 65 | 60 | 67 | |||||
| Other non-operating loss, net | 60 | 570 | 102 | |||||
| Operating income (loss) | 269 | (25 | ) | 378 | ||||
| Depreciation & amortization | 254 | 275 | 262 | |||||
| EBITDA (non-GAAP) | 523 | 250 | 640 | |||||
| Total operating income adjustments (1) | 235 | 402 | 24 | |||||
| Adjusted EBITDA (non-GAAP) | $ | 758 | $ | 651 | $ | 664 | ||
(1) See Table 1a for the identified adjustments to operating income.
Table 1b reconciles net income (loss) 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 (a non-GAAP financial measure) excludes the impact of certain identified items.
Table 1c. Reconciliation of Net Income (Loss) Attributable to Baker Hughes to Adjusted Net Income Attributable to Baker Hughes
| Three Months Ended | |||||||||
| (in millions, except per share amounts) | September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||||
| Net income (loss) attributable to Baker Hughes (GAAP) | $ | (17 | ) | $ | (839 | ) | $ | 8 | |
| Total operating income adjustments (1) | 235 | 402 | 24 | ||||||
| Other adjustments (non-operating) (2) | 63 | 580 | 140 | ||||||
| Tax on total adjustments | (15 | ) | (22 | ) | (3 | ) | |||
| Total adjustments, net of income tax | 282 | 959 | 161 | ||||||
| Less: adjustments attributable to noncontrolling interests | 2 | 7 | 28 | ||||||
| Adjustments attributable to Baker Hughes | 281 | 953 | 133 | ||||||
| Adjusted net income attributable to Baker Hughes (non-GAAP) | $ | 264 | $ | 114 | $ | 141 | |||
| Denominator: | |||||||||
| Weighted-average shares of Class A common stock outstanding diluted | 1,015 | 1,010 | 857 | ||||||
| Adjusted earnings per Class A share - diluted (non-GAAP) | $ | 0.26 | $ | 0.11 | $ | 0.16 | |||
| (1) | See Table 1a for the identified adjustments to operating income. |
| (2) | 3Q'22 primarily due to losses from the net change in fair value of our investment in C3 AI. 2Q'22 included losses related to the OFS business in Russia which was classified as held for sale and losses from the net change in fair value of our investments in ADNOC Drilling and C3 AI. 3Q'21 primarily due to losses from the net change in fair value of our investment in C3 AI. |
Table 1c reconciles net income (loss) 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 Cash Flow From Operating Activities to Free Cash Flow
| Three Months Ended | |||||||||
| (in millions) | September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||||
| Cash flow from operating activities (GAAP) | $ | 597 | $ | 321 | $ | 416 | |||
| Add: cash used in capital expenditures, net of proceeds from disposal of assets | (180 | ) | (174 | ) | (111 | ) | |||
| Free cash flow (non-GAAP) | $ | 417 | $ | 147 | $ | 305 | |||
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 (a non-GAAP financial measure). 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 September 30, | Nine Months Ended September 30, | |||||||||||
| (In millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Revenue | $ | 5,369 | $ | 5,093 | $ | 15,251 | $ | 15,017 | ||||
| Costs and expenses: | ||||||||||||
| Cost of revenue | 4,245 | 4,083 | 12,188 | 12,173 | ||||||||
| Selling, general and administrative | 620 | 607 | 1,865 | 1,836 | ||||||||
| Restructuring, impairment and other | 230 | 14 | 653 | 219 | ||||||||
| Separation related | 5 | 11 | 23 | 53 | ||||||||
| Total costs and expenses | 5,100 | 4,715 | 14,729 | 14,281 | ||||||||
| Operating income | 269 | 378 | 522 | 736 | ||||||||
| Other non-operating loss, net | (60 | ) | (102 | ) | (657 | ) | (791 | ) | ||||
| Interest expense, net | (65 | ) | (67 | ) | (188 | ) | (205 | ) | ||||
| Income (loss) before income taxes | 144 | 209 | (323 | ) | (260 | ) | ||||||
| Provision for income taxes | (153 | ) | (193 | ) | (443 | ) | (406 | ) | ||||
| Net income (loss) | (9 | ) | 16 | (766 | ) | (666 | ) | |||||
| Less: Net income (loss) attributable to noncontrolling interests | 8 | 8 | 17 | (154 | ) | |||||||
| Net income (loss) attributable to Baker Hughes Company | $ | (17 | ) | $ | 8 | $ | (783 | ) | $ | (512 | ) | |
| Per share amounts: | ||||||||||||
| Basic and diluted income (loss) per Class A common stock | $ | (0.02 | ) | $ | 0.01 | $ | (0.80 | ) | $ | (0.64 | ) | |
| Weighted average shares: | ||||||||||||
| Class A basic | 1,008 | 851 | 983 | 799 | ||||||||
| Class A diluted | 1,008 | 857 | 983 | 799 | ||||||||
| Cash dividend per Class A common stock | $ | 0.18 | $ | 0.18 | $ | 0.54 | $ | 0.54 | ||||
Condensed Consolidated Statements of Financial Position
(Unaudited)
| (In millions) | September 30, 2022 | December 31, 2021 | ||
| ASSETS | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $ | 2,851 | $ | 3,853 |
| Current receivables, net | 5,583 | 5,651 | ||
| Inventories, net | 4,111 | 3,979 | ||
| All other current assets | 1,790 | 1,582 | ||
| Total current assets | 14,335 | 15,065 | ||
| Property, plant and equipment, less accumulated depreciation | 4,381 | 4,877 | ||
| Goodwill | 5,435 | 5,959 | ||
| Other intangible assets, net | 3,980 | 4,131 | ||
| Contract and other deferred assets | 1,526 | 1,598 | ||
| All other assets | 3,508 | 3,678 | ||
| Total assets | $ | 33,165 | $ | 35,308 |
| LIABILITIES AND EQUITY | ||||
| Current Liabilities: | ||||
| Accounts payable | $ | 3,800 | $ | 3,745 |
| Current portion of long-term debt | 43 | 40 | ||
| Progress collections and deferred income | 3,262 | 3,232 | ||
| All other current liabilities | 2,360 | 2,111 | ||
| Total current liabilities | 9,465 | 9,128 | ||
| Long-term debt | 6,612 | 6,687 | ||
| Liabilities for pensions and other employee benefits | 1,020 | 1,110 | ||
| All other liabilities | 1,701 | 1,637 | ||
| Equity | 14,367 | 16,746 | ||
| Total liabilities and equity | $ | 33,165 | $ | 35,308 |
| Outstanding Baker Hughes Company shares: | ||||
| Class A common stock | 1,002 | 909 | ||
| Class B common stock | 7 | 117 | ||
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||
| (In millions) | 2022 | 2022 | 2021 | ||||||
| Cash flows from operating activities: | |||||||||
| Net loss | $ | (9 | ) | $ | (766 | ) | $ | (666 | ) |
| Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||
| Depreciation and amortization | 254 | 806 | 832 | ||||||
| Loss on assets held for sale | — | 426 | — | ||||||
| Loss on equity securities | 52 | 164 | 955 | ||||||
| Other asset impairments | 127 | 199 | 21 | ||||||
| Working capital | (143 | ) | (224 | ) | 470 | ||||
| Other operating items, net | 316 | 385 | (12 | ) | |||||
| Net cash flows from operating activities | 597 | 990 | 1,600 | ||||||
| Cash flows from investing activities: | |||||||||
| Expenditures for capital assets, net of proceeds from disposal of assets | (180 | ) | (531 | ) | (412 | ) | |||
| Other investing items, net | 30 | (49 | ) | 200 | |||||
| Net cash flows used in investing activities | (150 | ) | (580 | ) | (212 | ) | |||
| Cash flows from financing activities: | |||||||||
| Net repayments of debt and other borrowings | (7 | ) | (22 | ) | (60 | ) | |||
| Repayment of commercial paper | — | — | (832 | ) | |||||
| Dividends paid | (182 | ) | (536 | ) | (436 | ) | |||
| Distributions to GE | (1 | ) | (16 | ) | (127 | ) | |||
| Repurchase of Class A common stock | (265 | ) | (727 | ) | (106 | ) | |||
| Other financing items, net | 26 | 4 | (24 | ) | |||||
| Net cash flows used in financing activities | (429 | ) | (1,297 | ) | (1,585 | ) | |||
| Effect of currency exchange rate changes on cash and cash equivalents | (95 | ) | (115 | ) | (9 | ) | |||
| Decrease in cash and cash equivalents | (77 | ) | (1,002 | ) | (206 | ) | |||
| Cash and cash equivalents, beginning of period | 2,928 | 3,853 | 4,132 | ||||||
| Cash and cash equivalents, end of period | $ | 2,851 | $ | 2,851 | $ | 3,926 | |||
| Supplemental cash flows disclosures: | |||||||||
| Income taxes paid, net of refunds | $ | 113 | $ | 395 | $ | 181 | |||
| Interest paid | $ | 50 | $ | 190 | $ | 204 | |||
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 8:30 a.m. Eastern time, 7:30 a.m. Central time on Wednesday, October 19, 2022, 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, 2021; the Company's subsequent quarterly report on Form 10-Q for the quarterly periods ended June 30, 2022 and March 31, 2022; 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 (“EDGAR”) system at: www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement. 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:
COVID-19 - The continued spread of the COVID-19 virus and related uncertainties.
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; 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
Jud Bailey
+1 281-809-9088
investor.relations@bakerhughes.com
Media Relations
Thomas Millas
+1 713-879-2862
thomas.millas@bakerhughes.com
FAQ
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