10-KPeriod: FY2019

Baker Hughes Co Annual Report, Year Ended Dec 31, 2019

Filed February 13, 2020For Securities:BKR

Summary

Baker Hughes Company (BKR) concluded 2019 with a revenue of $23.8 billion, an increase from the prior year, driven by growth in Oilfield Services (OFS) and Oilfield Equipment (OFE), partially offset by declines in Turbomachinery & Process Solutions (TPS) and Digital Solutions (DS). The company has significantly advanced its separation from General Electric (GE), reducing GE's ownership to 36.7% by year-end 2019. This strategic de-linking is intended to solidify Baker Hughes' position as an independent energy technology company. Despite a dynamic industry environment marked by North American activity declines, the company highlights optimism for international growth, offshore markets, and the LNG sector. Baker Hughes is strategically focused on transforming its core business, leading with technology, and leading the energy transition. The company's commitment to reducing its carbon footprint, with a goal of net-zero emissions by 2050, alongside significant R&D investment of $687 million in 2019, underscores its forward-looking strategy in an evolving energy landscape.

Financial Highlights

47 data points
Beta

Revenue

$23.84B

18.6% Gross Margin

Net Income

$128.00M

0.5% Net Margin

EPS (Diluted)

$0.23

Total Assets

$53.37B

Cash & Equivalents

$3.25B

Free Cash Flow

$2.13B

Financial Statements
Beta
Revenue$23.84B
Gross Profit$4.43B
R&D Expenses$687.00M
SG&A Expenses$2.83B
Operating Expenses$22.76B
Operating Income$1.07B
Net Income$128.00M
EPS (Basic)$0.23
EPS (Diluted)$0.23

Key Highlights

  • 1Revenue increased by 4% to $23.8 billion in 2019, primarily due to higher activity in Oilfield Services (OFS) and Oilfield Equipment (OFE).
  • 2Baker Hughes substantially completed its separation from GE, reducing GE's ownership to 36.7% by year-end 2019.
  • 3The company invested $687 million in Research & Development in 2019, focusing on technological advancements across its segments.
  • 4Baker Hughes is positioning itself for the energy transition, committing to reduce CO2 equivalent emissions by 50% by 2030 and achieve net-zero by 2050.
  • 5The company experienced a 12% decrease in North American rig count, while international rig count increased by 11% in 2019.
  • 6Remaining Performance Obligations (RPO) stood at $22.9 billion as of December 31, 2019, indicating strong future revenue visibility.
  • 7Segment operating income increased by 13% to $2.04 billion, driven by improved performance in OFS, OFE, and TPS.

Frequently Asked Questions

In 2019, Baker Hughes reported revenue of $23.8 billion, an increase of 4% compared to 2018. Segment operating income increased by 13% to $2.04 billion. Net income attributable to Baker Hughes Company was $128 million.

Baker Hughes has significantly advanced its separation from GE. By December 31, 2019, GE's ownership interest had been reduced to 36.7%, and GE no longer held majority voting power. This process involved secondary public offerings and share repurchases.

Baker Hughes is strategically positioning itself for the energy transition by investing in technology and services that support lower carbon emissions. This includes commitments to reduce its own operational emissions and developing products and services to help customers lower their carbon footprint. They have committed to reducing CO2 equivalent emissions by 50% by 2030 and achieving net-zero by 2050.

Revenue growth was primarily driven by increased activity in the Oilfield Services (OFS) and Oilfield Equipment (OFE) segments. Conversely, Turbomachinery & Process Solutions (TPS) and Digital Solutions (DS) experienced revenue declines.

Baker Hughes expects continued decline in North America onshore activity but anticipates moderate growth in international onshore activity. The offshore market is expected to remain stable with consistent subsea tree awards, and the LNG market outlook is positive. Refinery, petrochemical, and industrial project demand is also expected to grow.