Baker Hughes Company Announces First-Quarter 2024 Results
First-quarter highlights
Orders of $6.5 billion, including $2.9 billion of IET orders.
Revenue of $6.4 billion, up 12% year-over-year.
Net income attributable to the Company of $455 million.
GAAP diluted EPS of $0.45 and adjusted diluted EPS* of $0.43.
Adjusted EBITDA* of $943 million, up 21% year-over-year.
Cash flows from operating activities were $784 million and free cash flow* was $502 million.
Returns to shareholders of $368 million, including $158 million of share repurchases.
London, 24 April 2024, (Oilandgaspress): – Baker Hughes Company (Nasdaq: BKR) (Baker Hughes or the Company) announced results today for the first quarter of 2024.
“2024 has gotten off to a good start for Baker Hughes. Our solid first-quarter results put us on a path toward achieving our full-year guidance and continue to build on the momentum from last year as we execute our strategy,” said Lorenzo Simonelli, Baker Hughes chairman and chief executive officer.
“We have started the year positively on the orders front. This is particularly evident in the IET segment, where we booked $2.9 billion of orders during the quarter, including large awards from Aramco for the Master Gas System 3 and Black & Veatch for Cedar LNG.”
“We delivered strong first quarter operating results, highlighted by 50% year-over-year Adjusted EPS growth. Importantly, we exceeded the midpoint of our EBITDA margin guidance, driven by outstanding operational performance in the IET segment. We also booked $239 million of new energy orders and generated more than $500 million of free cash flow.”
“We also continue to enhance returns to our shareholders. During the quarter, we increased our quarterly dividend by one penny to 21 cents, which represents an 11% increase year-over-year, repurchased $158 million of shares and remain firmly on-track to deliver 60% – 80% of free cash flow to shareholders.”
“I would like to thank our employees for their hard work and commitment to achieve our goals, delivering for our customers, and driving the Company forward,” 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) | March 31, 2024 | December 31, 2023 | March 31, 2023 | Sequential | Year-over- year | |||||||||
| Orders | $ | 6,542 | $ | 6,904 | $ | 7,632 | (5 | %) | (14 | %) | ||||
| Revenue | 6,418 | 6,835 | 5,716 | (6 | %) | 12 | % | |||||||
| Net income attributable to Baker Hughes | 455 | 439 | 576 | 4 | % | (21 | %) | |||||||
| Adjusted net income attributable to Baker Hughes* (non-GAAP) | 429 | 511 | 289 | (16 | %) | 48 | % | |||||||
| Operating income | 653 | 651 | 438 | — | % | 49 | % | |||||||
| Adjusted operating income* (non-GAAP) | 660 | 816 | 512 | (19 | %) | 29 | % | |||||||
| Adjusted EBITDA* (non-GAAP) | 943 | 1,091 | 782 | (14 | %) | 21 | % | |||||||
| Diluted earnings per share (EPS) | 0.45 | 0.43 | 0.57 | 4 | % | (20 | %) | |||||||
| Adjusted diluted EPS* (non-GAAP) | 0.43 | 0.51 | 0.28 | (16 | %) | 50 | % | |||||||
| Cash flow from operating activities | 784 | 932 | 461 | (16 | %) | 70 | % | |||||||
| Free cash flow* (non-GAAP) | 502 | 633 | 197 | (21 | %) | F | ||||||||
“F” is used in most instances when variance is above 100%. Additionally, “U” is used when variance is below (100)%.
* 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. Free cash flow conversion rate is defined as free cash flow divided by EBITDA.
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 Service & Equipment (“OFSE”) segment secured two significant, multi-year awards for on- and offshore services from Petrobras in the first quarter, demonstrating continued momentum in the country. The first contract will have Baker Hughes provide integrated well construction services across three rigs in the Buzios field offshore Brazil. The second contract will help Petrobras optimize efficiency, reliability and sustainability of its onshore operations in the Bahia-Terra cluster, where artificial lift services will be deployed across 450 wells. The scope of work includes electrical submersible pumps, variable speed drives and sand separation.
OFSE also saw strong demand for its LucidaTM advanced rotary steerable service during the first quarter, with three separate contracts across North America land. Pursuant to the first award, OFSE will utilize Lucida in approximately 100 wells for EQT in the U.S. Appalachian Basin. The other two contracts will deploy Lucida in the Midland and Delaware Basins, as well as the Denver-Julesburg Basin in the Rockies.
The Industrial & Energy Technology (“IET”) segment continued to demonstrate its leadership in gas technology. Major awards in the first quarter include Gas Technology Equipment for the third phase of Saudi Arabia’s Master Gas System project (MGS3), awarded by Worley on behalf of Aramco. Baker Hughes will supply 17 centrifugal compressors driven by our state-of-the-art aeroderivative gas turbines for the new 4,000-km pipeline. This new gas distribution project is expected to accelerate the switch from oil to gas for domestic power generation and contribute to the reduction of carbon emissions in the Kingdom.
IET was also awarded a Gas Technology Equipment order from Black & Veatch to supply Cedar LNG in Canada with an electric-driven liquefaction technology solution. Baker Hughes will supply a range of turbomachinery equipment to the project, which is powered by renewable electricity and is expected to be one of the lowest carbon intensity LNG facilities in the world.
IET secured three important on- and offshore production orders from Tecnimont (MAIRE) and the joint venture between National Petroleum Construction Company (NPCC) and Saipem to support the development of natural gas fields in Abu Dhabi in the United Arab Emirates. These awards, which include advanced compression and will see Baker Hughes supplying 11 centrifugal compressors, will support onshore and offshore operations.
Strong order momentum continues for IET’s Climate Technology Solutions (“CTS”). During the quarter, Baker Hughes received an award from Snam for compression trains driven by hydrogen-ready NovaLT12™ turbines to support a new gas compressor station in Italy that will eventually transport additional energy supplies from Azerbaijan, Africa and the Eastern Mediterranean region to Northern Europe. IET also booked a CTS contract to supply the Company’s ICL zero-emissions integrated compressor technology that will be deployed by TotalEnergies in its Aguada Pichana process plant in the Vaca Muerta region of Argentina.
Furthermore, IET secured a CTS order from a key Middle Eastern industrial company for the refurbishment of steam turbines and centrifugal compressor trains. This upgrade drives process efficiency improvement and 5% CO2 estimated emissions reduction as part of the customer’s energy transition roadmap.
Also in the first quarter, IET Industrial Solutions saw increased adoption of its CordantTM suite of digital solutions, receiving several multi-year awards to support a large LNG installation in the Middle East; expand upon an existing installation for a renewable energy customer’s wind and hydro facilities in Latin America; and deploy Asset Performance Management solutions to maximize uptime and increase production for a customer’s offshore operations in the Middle East.
| Consolidated Revenue and Operating Income by Reporting Segment | ||||||||||||||
| (in millions) | Three Months Ended | Variance | ||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | Sequential | Year-over- year | ||||||||||
| Oilfield Services & Equipment | $ | 3,783 | $ | 3,956 | $ | 3,577 | (4 | %) | 6 | % | ||||
| Industrial & Energy Technology | 2,634 | 2,879 | 2,138 | (8 | %) | 23 | % | |||||||
| Total segment revenue | 6,418 | 6,835 | 5,716 | (6 | %) | 12 | % | |||||||
| Oilfield Services & Equipment | 422 | 492 | 371 | (14 | %) | 14 | % | |||||||
| Industrial & Energy Technology | 330 | 412 | 241 | (20 | %) | 37 | % | |||||||
| Total segment operating income | 752 | 904 | 612 | (17 | %) | 23 | % | |||||||
| Corporate | (92 | ) | (88 | ) | (100 | ) | (4 | %) | 8 | % | ||||
| Inventory impairment | — | (2 | ) | (18 | ) | F | F | |||||||
| Restructuring, impairment & other | (7 | ) | (163 | ) | (56 | ) | 96 | % | 88 | % | ||||
| Operating income | 653 | 651 | 438 | — | % | 49 | % | |||||||
| Adjusted operating income* | 660 | 816 | 512 | (19 | %) | 29 | % | |||||||
| Depreciation & amortization | 283 | 274 | 269 | 3 | % | 5 | % | |||||||
| Adjusted EBITDA* | $ | 943 | $ | 1,091 | $ | 782 | (14 | %) | 21 | % | ||||
* 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 $6,418 million, a decrease of 6% sequentially and an increase of 12% 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 1.0; the IET book-to-bill ratio in the quarter was 1.1.
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