Baker Hughes Announces Fourth Quarter and Annual Results
2014 Full Year Results
Revenue for the year was a record $24.6 billion, up 10% compared to $22.4 billion for 2013.
In 2014, adjusted EBITDA (a non-GAAP measure) was $4.8 billion, a 30% increase compared to $3.7 billion for the prior year.
Adjusted net income (a non-GAAP measure) for the year was a record $1.8 billion ($4.22 per diluted share), up 59% compared to $1.2 billion ($2.62 per diluted share) for the year 2013. On a GAAP basis, net income attributable to Baker Hughes for the year was $1.7 billion ($3.92 per diluted share), an increase of 57% compared to $1.1 billion ($2.47 per diluted share) in 2013.
Free cash flow for the full year was a record $1.6 billion, compared to $1.5 billion for 2013.
For the year, capital expenditures were $1.8 billion, which is down $294 million or 14% compared to 2013. Depreciation and amortization expense for 2014 was $1.8 billion, up 7% compared to $1.7 billion in 2013.
Martin Craighead, Baker Hughes Chairman and Chief Executive Officer commented, “Our fourth quarter results punctuate a record year for our company in 2014. We delivered very strong growth in revenue, earnings and free cash flow during the fourth quarter. In spite of increasing concerns of challenging market conditions, we remained focused on achieving the performance objectives that we laid out last year. This was made possible by managing the business more efficiently and delivering on our strategy of converting innovations into earnings through new technologies that provide value to customers and competitive differentiation for Baker Hughes.
“In North America, our multiyear plan to transform and modernize our pressure pumping business delivered positive results during the quarter, leading to record revenue and the highest profitability for that product line in three years. Additionally, increasing demand for cost-effective well construction technologies and new production enhancement solutions, resulted in record revenue for completion systems, drill bits, artificial lift, and upstream chemicals.
“Our international operations posted higher revenue and margins across all segments. Our Middle East/Asia Pacific segment remains our fastest growing operation and achieved double-digit growth sequentially, including record revenue from drilling services and completion systems. Our Latin America segment achieved a significant increase in profitability, ending the year as our highest margin region for the quarter. Our Europe/Africa/Russia Caspian segment also delivered record revenue and operating profit, overcoming challenging geopolitical conditions. Our global supply chain delivered an unprecedented volume of products to end the year, contributing to the outstanding performance of our international business.
“When we reflect on the marketplace, the bearish sentiment that has pervaded our industry is understandable, considering the steep drop in commodity prices in recent months. While market demand ended up being more resilient in the fourth quarter than many had predicted, the recent declines seen in rig counts will clearly affect results in 2015. We are taking proactive steps to manage the business through these challenges, and we are well positioned financially for the months ahead.
Our strategy remains unchanged as we continue to focus on execution and delivering new technologies that lower the cost of well construction, optimize well production, and increase ultimate recoveries. Regarding our pending merger, I am pleased with the overall progress and the efforts of the integration teams to develop plans for an efficient and effective combination.”
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