- Orders of $5.9 billion for the quarter, down 14% sequentially
and up 15% year-over-year.
- Revenue of $5.0 billion for the quarter, up 4% sequentially and
down 2% year-over-year.
- GAAP operating loss of $25 million for the quarter, down $304
million sequentially and down $219 million year-over-year.
- Adjusted operating income (a non-GAAP measure) of $376 million
for the quarter, up 8% sequentially and up 13% year-over-year.
- Adjusted EBITDA* (a non-GAAP measure) of $651 million for the
quarter, up 4% sequentially and up 6% year-over-year.
- GAAP loss per share of $(0.84) for the quarter which included
$0.95 per share of adjusting items. Adjusted earnings per share (a
non-GAAP measure) was $0.11.
- Cash flows generated from operating activities were $321
million for the quarter. Free cash flow (a non-GAAP measure) for
the quarter was $147 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.
Baker Hughes Company (Nasdaq: BKR) ("Baker Hughes" or the
"Company") announced results today for the second quarter of
2022.
Three Months Ended
Variance
(in millions except per share amounts)
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Orders
$
5,860
$
6,837
$
5,093
(14)%
15%
Revenue
5,047
4,835
5,142
4%
(2)%
Operating income (loss)
(25
)
279
194
U
U
Adjusted operating income (non-GAAP)
376
348
333
8%
13%
Adjusted EBITDA (non-GAAP)
651
625
611
4%
6%
Net income (loss) attributable to Baker
Hughes
(839
)
72
(68
)
U
U
Adjusted net income (non-GAAP)
attributable to Baker Hughes
114
145
83
(21)%
37%
EPS attributable to Class A
shareholders
(0.84
)
0.08
(0.08
)
U
U
Adjusted EPS (non-GAAP) attributable to
Class A shareholders
0.11
0.15
0.10
(26)%
11%
Cash flow from operating activities
321
72
506
F
(37)%
Free cash flow (non-GAAP)
147
(105
)
385
F
(62)%
"F" is used in most instances when variance is above 100%.
Additionally, "U" is used in most instances when variance is below
(100)%.
“Our second quarter results were mixed as each product company
navigated a different set of challenges ranging from component
shortages and supply chain inflation to the suspension of our
Russian operations. While OFS and TPS are managing the current
situation fairly well, OFE and DS have both had more difficulty. I
would like to thank our team for their continued efforts and
commitment to deliver for our customers and execute on our strategy
through these volatile times,” said Lorenzo Simonelli, Baker Hughes
chairman and chief executive officer.
“As we look to the second half of 2022 and into 2023, the oil
markets face an unusual set of circumstances and challenges. On one
hand, the demand outlook for the next 12 to 18 months is
deteriorating, as inflation erodes consumer purchasing power and
central banks aggressively raise interest rates to combat
inflation. On the other hand, due to years of underinvestment
globally and the potential need to replace Russian barrels, broader
supply constraints can realistically keep commodity prices at
elevated levels even in a scenario of moderate demand destruction.
As a result, we believe the outlook for oil prices remains
volatile, but still supportive of strong activity levels as higher
spending is required to re-order the global energy map and likely
offsets demand destruction in most recessionary scenarios.”
“Baker Hughes is preparing for all of these scenarios and will
continue to execute on our long-term strategy. If commodity prices
remain resilient as we expect, our portfolio is well positioned to
benefit from a strong LNG cycle and a multi-year upstream spending
cycle. We will also continue to invest in our energy transition and
industrial initiatives, while also returning 60 to 80% of free cash
flow to shareholders,” concluded Simonelli.
Quarter Highlights
Supporting our Customers
The OFS segment saw continued customer interest in its
electrical submersible pumps (ESPs) and artificial lift solutions.
OFS secured an exclusive three year contract to provide ESPs for an
operator in the Permian Delaware Basin for existing wells as well
as ESPs for approximately 250 new wells through 2025. The contract
enables the customer to advance development of its Permian assets
while reducing overall operating costs through improved ESP
performance, field service and equipment delivery.
OFS also secured a four-year contract to provide artificial lift
solutions for the Missan Field in Iraq. The contract includes the
supply of electrical submersible pumps (ESP), surface equipment and
dedicated field services. The ESPs will be utilized to maximize oil
recovery and extend system run-life in harsh environments.
The TPS segment continued to have another strong quarter of LNG
leadership. TPS secured a major contract from Bechtel to provide
seven mid-scale LNG trains to support the Stage 3 expansion project
of Cheniere’s Corpus Christi Liquefaction facility (CCL). Each
train is comprised of two electric motor-driven compressors
producing approximately 1.5 MTPA of LNG, totaling approximately
10.5 MTPA of production capacity. This award builds on the strong
relationship between Baker Hughes and Cheniere since 2012, as we
currently provide all liquefaction equipment for Cheniere’s Corpus
Christi and Sabine Pass projects.
Also in LNG, TPS continued to support New Fortress Energy’s
(NFE) “Fast LNG” facilities project with a contract for two main
refrigerant turbocompressor strings in offshore. Each
turbocompressor will feature one LM6000PF+ gas turbine. NFE will
deploy Baker Hughes’ technology in various offshore projects across
the globe, helping to secure overall LNG supply for NFE’s customer
base.
TPS was awarded a contract from Samsung Engineering (SECL) to
supply 14 electric motor driven compressors (EMCC) to support gas
processing for Saudi Aramco’s Jafurah unconventional gas field
project, the largest non-associated gas field in the Kingdom of
Saudi Arabia. For this project, Baker Hughes will leverage its
local compressor packaging facility in Modon, supporting the
Kingdom’s in-country total value add program.
TPS was awarded a contract by a subsidiary of Tellurian Inc., to
provide electric-powered Integrated Compressor Line (ICL)
technology and turbomachinery equipment for a natural gas
transmission project in southwest Louisiana. The Driftwood pipeline
project will be the first North American application of Baker
Hughes’ ICL technology - the project is expected to supply upwards
of 5.5 billion cubic feet of natural gas daily, with virtually no
emissions. The project will initially include four ICL compressors
and other turbomachinery equipment for the compressor trains, as
well as a LM6000PF+ gas turbine for backup power for the initial
phase of the pipeline project.
The OFE segment continued to gain momentum internationally with
its offshore flexible pipe technology, securing several large
contracts with multiple customers across the Americas and the
Middle East. OFE will provide flexible pipe systems and services,
including risers, flowlines and jumpers, to improve oil recovery
and help to extend field life and profitability. In addition, OFE
continued to find new sustainable applications for its onshore
flexible pipe technology, deploying it for the first time as part
of a CO2 district heating and cooling system.
The DS segment continued to gain traction in the aerospace
sector for industrial asset inspection solutions. Waygate
Technologies secured several multi-year contracts with aircraft
manufacturers in North America and China for its industrial
inspection services as well as ultrasonic inspection equipment.
Waygate’s solutions will be used to inspect additive-printed parts
and components to ensure structural integrity and material
durability, which is also critical for the growing electric
mobility segment.
Executing on Priorities and Leading with Innovation
OFS continued to maintain its strategic market leadership in
Saudi Arabia, securing its third contract with Aramco in the past
two quarters for Integrated Well Services & Solutions
(IWS&S). IWS&S’s integrated model helps optimize project
performance and value by combining project management expertise, a
comprehensive technology portfolio, and service delivery for the
customer.
Baker Hughes continued to support its customers as they work
towards their net-zero ambitions. TPS secured an important upgrade
contract with Société pour la Construction du Gazoduc Transtunisien
(SCOGAT), part of the Trans Tunisian Pipeline Company (TTPC), for
two compression stations in Tunisia. The project will replace three
gas turbines from Single Annular Combustor (SAC) to Dry Low
Emission (DLE) turbines, contributing to a significant reduction of
NOx in ISO conditions compared to the previous solutions installed
and supporting the customer in meeting its emission reduction
targets.
TPS continued to support the growth of the hydrogen economy. TPS
secured a contract with Air Products to supply advanced compression
technology for production of green ammonia for the NEOM Green
Hydrogen Company in the Kingdom of Saudi Arabia. When completed,
NEOM will be the world’s largest single-line ammonia and the first
full scale green ammonia plant. The order is part of the companies’
previously announced hydrogen collaboration agreement in 2021 and
leverages Baker Hughes’ broad experience and references in
supplying syngas and ammonia compressors.
DS gained traction with its emissions management portfolio of
technologies. Following a memorandum of understanding signed in
February with the Egyptian General Petroleum Corporation (EGPC), DS
secured a contract with Petrosafe, an EGPC subsidiary, for the
first deployment of flare.IQ technology to reduce emissions in
refining operations in the country. The deployment will be
implemented at the APC Refinery in Alexandria, supporting Egypt’s
low-carbon strategy and tackling emissions in the sector as the
country prepares to host COP27 in November.
DS saw continued interest for its condition monitoring systems
and services in the industrial sector. Bently Nevada secured a
contract to upgrade the machinery protection systems for critical
machines at a steel plant in the Middle East. The contract includes
Bently Nevada’s latest Orbit 60 system which will provide the
customer with reliable protection and enable advanced condition
monitoring of critical assets.
Consolidated Results by Reporting
Segment
Consolidated Orders by Reporting Segment
(in millions)
Three Months Ended
Variance
Consolidated segment orders
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Oilfield Services
$
2,669
$
2,531
$
2,359
5
%
13
%
Oilfield Equipment
723
739
681
(2
)%
6
%
Turbomachinery & Process Solutions
1,858
3,000
1,513
(38
)%
23
%
Digital Solutions
609
567
540
7
%
13
%
Total
$
5,860
$
6,837
$
5,093
(14
)%
15
%
Orders for the quarter were $5,860 million, down 14%
sequentially and up 15% year-over-year. The sequential decrease was
a result of lower order intake in Turbomachinery & Process
Solutions and Oilfield Equipment, partially offset by an increase
in Oilfield Services and Digital Solutions. Sequentially, equipment
orders were down 37% and service orders were up 14%.
Year-over-year, the increase in orders was a result of higher
order intake in all segments. Year-over-year equipment orders were
up 17% and service orders were up 14%.
The Company's total book-to-bill ratio in the quarter was 1.2;
the equipment book-to-bill ratio in the quarter was 1.2.
Remaining Performance Obligations (RPO) in the second quarter
ended at $24.3 billion, a decrease of $1.5 billion from the first
quarter of 2022. Equipment RPO was $8.8 billion, down 11%. Services
RPO was $15.5 billion, down 3% sequentially.
Consolidated Revenue by Reporting Segment
(in millions)
Three Months Ended
Variance
Consolidated segment revenue
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Oilfield Services
$
2,689
$
2,489
$
2,358
8
%
14
%
Oilfield Equipment
541
528
637
2
%
(15
)%
Turbomachinery & Process Solutions
1,293
1,345
1,628
(4
)%
(21
)%
Digital Solutions
524
474
520
11
%
1
%
Total
$
5,047
$
4,835
$
5,142
4
%
(2
)%
Revenue for the quarter was $5,047 million, an increase of 4%,
sequentially. The increase in revenue was driven by higher volume
in Digital Solutions, Oilfield Services, and Oilfield Equipment,
partially offset by lower volume in Turbomachinery & Process
Solutions.
Compared to the same quarter last year, revenue was down 2%,
driven by lower volume in Turbomachinery & Process Solutions
and Oilfield Equipment, partially offset by higher volume in
Oilfield Services and Digital Solutions.
Consolidated Operating Income by Reporting Segment
(in millions)
Three Months Ended
Variance
Segment operating income
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Oilfield Services
$
261
$
221
$
171
18
%
52
%
Oilfield Equipment
(12
)
(8
)
28
(55
)%
U
Turbomachinery & Process Solutions
218
226
220
(4
)%
(1
)%
Digital Solutions
18
15
25
21
%
(28
)%
Total segment operating income
485
453
444
7
%
9
%
Corporate
(108
)
(105
)
(111
)
(3
)%
2
%
Inventory impairment
(31
)
—
—
U
U
Restructuring, impairment & other
(362
)
(61
)
(125
)
U
U
Separation related
(9
)
(9
)
(15
)
—
%
40
%
Operating income (loss)
(25
)
279
194
U
U
Adjusted operating income*
376
348
333
8
%
13
%
Depreciation & amortization
275
277
278
(1
)%
(1
)%
Adjusted EBITDA*
$
651
$
625
$
611
4
%
6
%
*Non-GAAP measure.
"F" is used in most instances when variance is above 100%.
Additionally, "U" is used in most instances when variance is below
(100)%.
On a GAAP basis, operating loss for the second quarter of 2022
was $25 million. Operating income decreased $304 million
sequentially and decreased $219 million year-over-year. Total
segment operating income was $485 million for the second quarter of
2022, up 7% sequentially and up 9% year-over-year. Adjusted
operating income (a non-GAAP measure) for the second quarter of
2022 was $376 million, which excludes adjustments totaling $402
million before tax. Included in these adjustments was a $365
million charge related to the suspension of substantially all of
Baker Hughes' operations in Russia, which are either prohibited
under applicable sanctions or unsustainable in the current
environment. A complete list of the adjusting items and associated
reconciliation from GAAP has been provided in Table 1a in the
section entitled “Reconciliation of GAAP to non-GAAP Financial
Measures.” Adjusted operating income for the second quarter of 2022
was up 8% sequentially, primarily driven by higher volume in
Oilfield Services and Digital Solutions. Adjusted operating income
was up 13% year-over-year driven by volume and margin expansion in
Oilfield Services, partially offset by lower volume in
Turbomachinery & Process Solutions and Oilfield Equipment, and
margin contraction in Digital Solutions.
Depreciation and amortization for the second quarter of 2022 was
$275 million.
Adjusted EBITDA (a non-GAAP measure) for the second quarter of
2022 was $651 million, which excludes adjustments totaling $402
million before tax. See Table 1b in the section entitled
“Reconciliation of GAAP to non-GAAP Financial Measures.” Adjusted
EBITDA for the second quarter was up 4% sequentially and up 6%
year-over-year.
Corporate costs were $108 million in the second quarter of 2022,
up 3% sequentially and down 2% year-over-year.
Other Financial Items
Income tax expense in the second quarter of 2022 was $182
million.
Other non-operating loss in the second quarter of 2022 was $570
million. Included in other non-operating loss are $426 million of
losses related to the Oilfield Services business in Russia which
was classified as held for sale at the end of the second quarter,
an $85 million loss from the net change in fair value of our
investment in ADNOC Drilling, and a $38 million loss from the net
change in fair value of our investment in C3 AI.
GAAP diluted earnings per share was $(0.84). Adjusted diluted
earnings per share was $0.11. Excluded from adjusted diluted
earnings per share were all items listed in Table 1a as well as the
"other adjustments (non-operating)" found in Table 1c in the
section entitled "Reconciliation of GAAP to non-GAAP Financial
Measures."
Cash flow from operating activities was $321 million for the
second quarter of 2022. Free cash flow (a non-GAAP measure) for the
quarter was $147 million. A reconciliation from GAAP has been
provided in Table 1d in the section entitled "Reconciliation of
GAAP to non-GAAP Financial Measures."
Capital expenditures, net of proceeds from disposal of assets,
were $174 million for the second quarter of 2022.
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
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Revenue
$
2,689
$
2,489
$
2,358
8
%
14
%
Operating income
$
261
$
221
$
171
18
%
52
%
Operating income margin
9.7
%
8.9
%
7.3
%
0.8pts
2.4pts
Depreciation & amortization
$
201
$
201
$
195
—
%
3
%
EBITDA*
$
462
$
422
$
366
9
%
26
%
EBITDA margin*
17.2
%
16.9
%
15.5
%
0.2pts
1.6pts
Oilfield Services (OFS) revenue of $2,689 million for the second
quarter increased by $200 million, or 8%, sequentially.
North America revenue was $857 million, up 9% sequentially.
International revenue was $1,832 million, an increase of 8%
sequentially, driven by higher revenues in Sub Saharan Africa,
Latin America, Europe, and the Middle East, partially offset by
lower revenues in Russia Caspian.
Segment operating income before tax for the quarter was $261
million. Operating income for the second quarter was up $40
million, or 18% sequentially, primarily driven by higher volume and
price, partially offset by cost inflation.
Oilfield Equipment
(in millions)
Three Months Ended
Variance
Oilfield Equipment
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Orders
$
723
$
739
$
681
(2
) %
6
%
Revenue
$
541
$
528
$
637
2
%
(15
)%
Operating income (loss)
$
(12
)
$
(8
)
$
28
(55
)%
U
Operating income margin
(2.3
)%
(1.5
)%
4.3
%
(0.8)pts
(6.6)pts
Depreciation & amortization
$
20
$
21
$
26
(2
)%
(22
)%
EBITDA*
$
8
$
13
$
53
(38
)%
(85
)%
EBITDA margin*
1.4
%
2.4
%
8.4
%
(0.9)pts
(6.9)pts
Oilfield Equipment (OFE) orders of $723 million were up $43
million, or 6% year-over-year, driven by higher order intake in
Flexibles, Services, and Surface Pressure Control, partially offset
by lower orders in Subsea Production Systems and the removal of
Subsea Drilling Services from consolidated OFE operations.
Equipment orders were up $16 million, or 3%, and services orders
were up $26 million, or 13% year-over-year.
*Non-GAAP measure.
OFE revenue of $541 million for the quarter decreased $95
million, or 15%, year-over-year. The decrease was driven by lower
volume in Subsea Production Systems and Surface Pressure Control
Projects, and from the removal of Subsea Drilling Services from
consolidated OFE operations. These decreases were partially offset
by higher volume in Services and Flexibles.
Segment operating loss before tax for the quarter was $12
million, a decline of $40 million year-over-year, driven by lower
volume and lower cost productivity.
Turbomachinery & Process Solutions
(in millions)
Three Months Ended
Variance
Turbomachinery & Process
Solutions
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Orders
$
1,858
$
3,000
$
1,513
(38
)%
23
%
Revenue
$
1,293
$
1,345
$
1,628
(4
)%
(21
)%
Operating income
$
218
$
226
$
220
(4
)%
(1
)%
Operating income margin
16.8
%
16.8
%
13.5
%
0.1pts
3.3pts
Depreciation & amortization
$
29
$
29
$
30
2
%
(3
)%
EBITDA*
$
247
$
255
$
250
(3
)%
(1
)%
EBITDA margin*
19.1
%
18.9
%
15.4
%
0.2pts
3.8pts
Turbomachinery & Process Solutions (TPS) orders of $1,858
million were up $346 million, or 23% year-over-year. Equipment
orders were up $215 million, or 38% and service orders were up $131
million, or 14%.
TPS revenue of $1,293 million for the quarter decreased $335
million, or 21%, year-over-year. The decrease was primarily driven
by lower equipment and projects volume. Equipment revenue in the
quarter represented 42% of TPS revenue, and service revenue
represented 58% of TPS revenue.
Segment operating income before tax for the quarter was $218
million, down $2 million, or 1%, year-over-year. The decrease was
driven by volume, partially offset by higher services mix.
*Non-GAAP measure.
Digital Solutions
(in millions)
Three Months Ended
Variance
Digital Solutions
June 30, 2022
March 31, 2022
June 30, 2021
Sequential
Year-over-year
Orders
$
609
$
567
$
540
7
%
13
%
Revenue
$
524
$
474
$
520
11
%
1
%
Operating income
$
18
$
15
$
25
21
%
(28
)%
Operating income margin
3.4
%
3.2
%
4.8
%
0.3pts
(1.4)pts
Depreciation & amortization
$
20
$
22
$
22
(9
)%
(11
)%
EBITDA*
$
38
$
37
$
47
3
%
(20
)%
EBITDA margin*
7.2
%
7.7
%
9.1
%
(0.5)pts
(1.9)pts
Digital Solutions (DS) orders of $609 million were up $69
million, or 13%, year-over-year, driven by higher order intake in
the Process and Pipeline Services, Bently Nevada, Precision Sensors
and Instrumentation, and Waygate Technologies businesses, partially
offset by lower order intake in the Nexus Controls businesses.
DS revenue of $524 million for the quarter increased $4 million,
or 1%, year-over-year, primarily driven by higher volume in the
Process and Pipeline Services and Waygate Technologies businesses,
partially offset by lower volume in the Bently Nevada and Nexus
Controls businesses.
Segment operating income before tax for the quarter was $18
million, down $7 million, or 28%, year-over-year. The decrease
year-over-year was primarily driven by lower cost productivity and
cost inflation.
*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)
June 30, 2022
March 31, 2022
June 30, 2021
Operating income (loss) (GAAP)
$
(25
)
$
279
$
194
Separation related
9
9
15
Restructuring, impairment & other
362
61
125
Inventory impairment
31
—
—
Total operating income adjustments
402
70
139
Adjusted operating income (non-GAAP)
$
376
$
348
$
333
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)
June 30, 2022
March 31, 2022
June 30, 2021
Net income (loss) attributable to Baker
Hughes (GAAP)
$
(839
)
$
72
$
(68
)
Net income (loss) attributable to
noncontrolling interests
2
8
(9
)
Provision for income taxes
182
107
143
Interest expense, net
60
64
65
Other non-operating loss, net
570
28
63
Operating income (loss)
(25
)
279
194
Depreciation & amortization
275
277
278
EBITDA (non-GAAP)
250
555
472
Total operating income adjustments (1)
402
70
139
Adjusted EBITDA (non-GAAP)
$
651
$
625
$
611
(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)
June 30, 2022
March 31, 2022
June 30, 2021
Net income (loss) attributable to Baker
Hughes (GAAP)
$
(839
)
$
72
$
(68
)
Total operating income adjustments (1)
402
70
139
Other adjustments (non-operating) (2)
580
19
71
Tax on total adjustments
(22
)
(12
)
(19
)
Total adjustments, net of income tax
959
77
191
Less: adjustments attributable to
noncontrolling interests
7
3
40
Adjustments attributable to Baker
Hughes
953
74
151
Adjusted net income attributable to Baker
Hughes (non-GAAP)
$
114
$
145
$
83
Denominator:
Weighted-average shares of Class A common
stock outstanding diluted
1,010
948
811
Adjusted earnings per Class A share -
diluted (non-GAAP)
$
0.11
$
0.15
$
0.10
(1)
See Table 1a for the identified
adjustments to operating income.
(2)
2Q'22 includes 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. 1Q'22 included a gain from the change in fair
value of our investment in ADNOC Drilling, partially offset by a
loss from the change in fair value of our investment in C3 AI.
2Q'21 primarily due to a non-recurring charge for a loss
contingency related to certain tax matters and 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)
June 30, 2022
March 31, 2022
June 30, 2021
Cash flow from operating activities
(GAAP)
$
321
$
72
$
506
Add: cash used in capital expenditures,
net of proceeds from disposal of assets
(174
)
(177
)
(121
)
Free cash flow (non-GAAP)
$
147
$
(105
)
$
385
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 June
30,
Six Months Ended June
30,
(In millions, except per share
amounts)
2022
2021
2022
2021
Revenue
$
5,047
$
5,142
$
9,882
$
9,924
Costs and expenses:
Cost of revenue
4,077
4,166
7,943
8,090
Selling, general and administrative
624
642
1,245
1,229
Restructuring, impairment and other
362
125
423
205
Separation related
9
15
18
42
Total costs and expenses
5,072
4,948
9,629
9,566
Operating income (loss)
(25
)
194
253
358
Other non-operating loss, net
(570
)
(63
)
(597
)
(689
)
Interest expense, net
(60
)
(65
)
(124
)
(138
)
Income (loss) before income taxes
(655
)
66
(468
)
(469
)
Provision for income taxes
(182
)
(143
)
(289
)
(213
)
Net loss
(837
)
(77
)
(757
)
(682
)
Less: Net income (loss) attributable to
noncontrolling interests
2
(9
)
10
(162
)
Net loss attributable to Baker Hughes
Company
$
(839
)
$
(68
)
$
(767
)
$
(520
)
Per share amounts:
Basic and diluted loss per Class A common
stock
$
(0.84
)
$
(0.08
)
$
(0.79
)
$
(0.67
)
Weighted average shares:
Class A basic & diluted
1,001
806
970
773
Cash dividend per Class A common stock
$
0.18
$
0.18
$
0.36
$
0.36
Condensed Consolidated Statements of
Financial Position
(Unaudited)
(In millions)
June 30, 2022
December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents
$
2,928
$
3,853
Current receivables, net
5,572
5,651
Inventories, net
4,052
3,979
All other current assets
1,647
1,582
Total current assets
14,199
15,065
Property, plant and equipment, less
accumulated depreciation
4,531
4,877
Goodwill
5,741
5,959
Other intangible assets, net
4,049
4,131
Contract and other deferred assets
1,547
1,598
All other assets
3,686
3,678
Total assets
$
33,753
$
35,308
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$
3,764
$
3,745
Current portion of long-term debt
34
40
Progress collections and deferred
income
3,289
3,232
All other current liabilities
2,288
2,111
Total current liabilities
9,375
9,128
Long-term debt
6,625
6,687
Liabilities for pensions and other
employee benefits
996
1,110
All other liabilities
1,671
1,637
Equity
15,086
16,746
Total liabilities and equity
$
33,753
$
35,308
Outstanding Baker Hughes Company
shares:
Class A common stock
1,012
909
Class B common stock
7
117
Condensed Consolidated Statements of Cash
Flows
(Unaudited)
Three Months
Ended
June 30,
Six Months Ended
June 30,
(In millions)
2022
2022
2021
Cash flows from operating activities:
Net loss
$
(837
)
$
(757
)
$
(682
)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization
275
551
570
Loss on assets held for sale
426
426
—
Loss on equity securities
123
112
815
Other asset impairments
72
72
22
Working capital
12
(81
)
571
Other operating items, net
250
70
(112
)
Net cash flows from operating
activities
321
393
1,184
Cash flows from investing activities:
Expenditures for capital assets, net of
proceeds from disposal of assets
(174
)
(351
)
(301
)
Other investing items, net
10
(79
)
171
Net cash flows used in investing
activities
(164
)
(430
)
(130
)
Cash flows from financing activities:
Net repayments of debt and other
borrowings
(4
)
(15
)
(45
)
Repayment of commercial paper
—
—
(832
)
Dividends paid
(182
)
(354
)
(280
)
Distributions to GE
(1
)
(15
)
(95
)
Repurchase of Class A common stock
(226
)
(462
)
—
Other financing items, net
14
(22
)
(33
)
Net cash flows used in financing
activities
(399
)
(868
)
(1,285
)
Effect of currency exchange rate changes
on cash and cash equivalents
(21
)
(20
)
12
Decrease in cash and cash equivalents
(263
)
(925
)
(219
)
Cash and cash equivalents, beginning of
period
3,191
3,853
4,132
Cash and cash equivalents, end of
period
$
2,928
$
2,928
$
3,913
Supplemental cash flows disclosures:
Income taxes paid, net of refunds
$
152
$
282
$
48
Interest paid
$
92
$
140
$
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 8:30 a.m. Eastern time, 7:30
a.m. Central time on Wednesday, July 20, 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”). The words
“anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,”
“estimate,” “project,” “foresee,” “forecasts,” “predict,”
“outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,”
“may,” “probable,” “likely,” and similar expressions, and the
negative thereof, are intended to identify forward-looking
statements. 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 period
ended 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.
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
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version on businesswire.com: https://www.businesswire.com/news/home/20220720005109/en/
Investor Relations
Jud Bailey +1 281-809-9088
investor.relations@bakerhughes.com
Media Relations
Thomas Millas +1 713-879-2862 thomas.millas@bakerhughes.com
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