Baker Hughes Company announced results today for the second quarter of 2023.
“We were pleased with our second quarter results and remain optimistic on the outlook for 2023. We maintained our strong order momentum in Industrial & Energy Technology (IET) and Oilfield Services & Equipment (OFSE), specifically within Subsea & Surface Pressure Systems (SSPS). We also delivered solid operating results at the higher end of our guidance in both business segments, booked almost $150 million of New Energy orders and generated approximately $620 million of free cash flow,” said Lorenzo Simonelli, Baker Hughes chairman and chief executive officer.
“Growing economic uncertainty continues to drive commodity price volatility globally. However, despite lower oil prices over the first half of the year, we maintain a constructive outlook for global upstream spending in 2023. Market softness in North America is expected to be more than offset by strength in international and offshore markets.”
“Outside of the upstream markets, we remain confident on the LNG outlook, with solid demand growth this year led by Europe and Asia. Based on the continued development of the LNG project pipeline, we still expect the market to exceed 65 million tons per annum (MTPA) of FIDs this year and should see a similar level of activity in 2024. We continue to see the potential for this LNG cycle to extend for several years with a pipeline of new international opportunities expanding project visibility out to 2026 and beyond.”
“Overall, I am extremely excited about the multitude of new opportunities developing for solutions that leverage our unique portfolio. Combining these growth opportunities with our business transformation objectives provides attractive upside for our margins and returns going forward, and I want to thank our shareholders, our customers, and our employees for their continued support,” concluded Simonelli.
| Three Months Ended | Variance | |||||||||||||
| (in millions except per share amounts) | June 30, 2023 |
March 31, 2023 |
June 30, 2022 |
Sequential | Year-over- year |
|||||||||
| Orders | $ | 7,474 | $ | 7,632 | $ | 5,860 | (2 | %) | 28 | % | ||||
| Revenue | 6,315 | 5,716 | 5,047 | 10 | % | 25 | % | |||||||
| Net income (loss) attributable to Baker Hughes | 410 | 576 | (839 | ) | (29 | %) | F | |||||||
| Adjusted net income (non-GAAP) attributable to Baker Hughes | 395 | 289 | 114 | 37 | % | F | ||||||||
| Operating income (loss) | 514 | 438 | (25 | ) | 17 | % | F | |||||||
| Adjusted operating income (non-GAAP) | 631 | 512 | 376 | 23 | % | 68 | % | |||||||
| Adjusted EBITDA (non-GAAP) | 907 | 782 | 651 | 16 | % | 39 | % | |||||||
| Diluted earnings per share (EPS) | 0.40 | 0.57 | (0.84 | ) | (29 | %) | F | |||||||
| Adjusted diluted EPS (non-GAAP) | 0.39 | 0.28 | 0.11 | 37 | % | F | ||||||||
| Cash flow from operating activities | 858 | 461 | 321 | 86 | % | F | ||||||||
| Free cash flow (non-GAAP) | 623 | 197 | 147 | F | F | |||||||||
“F” is used in most instances when variance is above 100%. Additionally, “U” is used in most instances when variance is below (100)%. Please see reconciliations in the section entitled “Reconciliation of GAAP to non-GAAP Financial Measures.”
Quarter Highlights
Supporting Our Customers
The OFSE business segment strengthened Baker Hughes’ presence in West Africa and delivered on its commitment to support its customers’ net-zero emissions goals with a major award from Eni and its partner Petroci for the Baleine Phase 2 Project in Ivory Coast. This award will deliver eight deep water trees, three Aptara™ manifolds, the relevant subsea production control system, and flexible risers and jumpers.
Building on the July 2022 acquisition of AccessESP and the growing market for rigless deployed electrical submersible pumps (ESP), OFSE secured two new contracts with key customers in the Middle East, highlighting the opportunity for large-scale implementation of rigless deployed ESPs in the region.
A successful track record with a Middle East operator earned Baker Hughes a win for work in the largest gas discovery in the Black Sea. Baker Hughes will provide lower completions equipment and upper completions with intelligent design, as well as project management and ongoing operational support. The project is expected to have a transformative impact on the Turkish economy, driving job creation, technological advancements and energy security for the nation.
The IET business segment enjoyed another strong quarter in Gas Technology as momentum for LNG and New Energy continues to build. IET received a significant LNG order from Bechtel to supply three Main Refrigerant Compressors (MRCs) for NextDecade’s Rio Grande LNG project in the Port of Brownsville, Texas. In total, Baker Hughes will supply six Frame 7 gas turbines paired with 18 centrifugal compressors across Rio Grande’s first three LNG trains in a parallel configuration arrangement, providing more operational flexibility for a nameplate capacity of 17.6 (MTPA).
IET demonstrated further leadership in the floating production storage and offloading (FPSO) market, securing an order from MODEC for a combined cycle power generation solution to help reduce the overall FPSO carbon emissions for Equinor’s BM-C-33 project offshore Brazil.
In Algeria, IET’s Gas Technology Equipment product line secured an important order from Tecnimont, part of MAIRE Group, to supply five of its innovative and flexible NovaLT™16 gas turbines as part of one power generation unit and three compressor trains for a new Liquefied Petroleum Gas (LPG) extraction plant inside an existing oil and gas treatment complex. When operational, the LPG plant will process 10 million standard cubic meters per day of associated gas, helping to stabilize and increase the country’s gas production.
During the second quarter, IET signed a long-term Multi-Maintenance Program contract to provide maintenance planning, project management, and resident engineering on site for the customer’s current fleet of steam turbines and centrifugal compressors. This contract demonstrates the full range of capabilities and complementary services of our IET Digital and Gas Tech Services portfolio, providing a blueprint for expanding our digital platform with new and existing customers.
IET’s Condition Monitoring product line saw continued quarterly momentum, securing a Bently Nevada agreement to deliver asset protection and monitoring hardware, software and services for a floating LNG project offshore Malaysia. The scope includes Orbit 60 condition monitoring system, Ranger Pro wireless monitoring systems, System 1 software, and cyber security enhancements, as well as end-to-end project management support and services.
Condition Monitoring also saw increased customer interest in the petrochemical and refining markets. Bently Nevada was selected as the single asset monitoring and protection provider for two of the largest new petrochemical developments in the Middle East and North America, supporting increased capacity to meet growing demand. Bently Nevada also secured a multimillion-dollar contract in the Middle East to upgrade the customer’s entire System 1 software base across six refineries; and a five-year Software-as-a-Service contract in North America from a global facilities maintenance provider to deliver data-driven asset strategy optimization on up to 4 million assets.
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