10-QPeriod: Q1 FY2017

Baker Hughes Co Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 27, 2018For Securities:BKR

Summary

Baker Hughes, a GE company (BHGE) reported its first quarter 2018 results, showing a significant increase in revenue to $5.4 billion, up from $3.1 billion in the prior year, primarily driven by the acquisition of Baker Hughes. Despite the revenue growth, the company reported a net loss of $19 million for the quarter, compared to a net income of $66 million in Q1 2017. This loss was impacted by restructuring, impairment, and merger-related costs totaling $208 million. The company's operating segments showed mixed performance. Oilfield Services (OFS) revenue saw a substantial increase due to the acquisition, while Turbomachinery & Process Solutions (TPS) experienced a revenue decline. The company is optimistic about the North American onshore activity outlook but remains cautious about international markets and offshore projects due to continued oil price volatility. Overall, the company faces near-term volatility but maintains a positive long-term view on energy demand and industry complexity.

Financial Highlights

26 data points
Beta

Revenue

$3.06B

22.4% Gross Margin

Net Income

$0.00

EPS (Diluted)

$0.00

Cash & Equivalents

$1.03B

Free Cash Flow

-$346.00M

Financial Statements
Beta
Revenue$3.06B
Cost of Revenue$1.85B
Gross Profit$687.00M
SG&A Expenses$492.00M
Operating Expenses$2.98B
Operating Income$86.00M
Net Income$0

Key Highlights

  • 1Total revenue increased by 76% to $5.4 billion in Q1 2018, largely due to the acquisition of Baker Hughes.
  • 2The company reported a net loss of $19 million in Q1 2018, a decrease from a net income of $66 million in Q1 2017.
  • 3Restructuring, impairment, and merger-related costs amounted to $208 million in Q1 2018.
  • 4Oilfield Services (OFS) segment revenue increased significantly due to the Baker Hughes acquisition, while Turbomachinery & Process Solutions (TPS) saw a revenue decline.
  • 5North America rig counts increased by 19% year-over-year, indicating improving activity levels.
  • 6The company ended the quarter with $5.6 billion in cash, cash equivalents, and restricted cash.
  • 7Baker Hughes, a GE company, continued its integration efforts, with $46 million in merger and related costs during the quarter.

Frequently Asked Questions

The primary driver of the significant revenue increase to $5.4 billion in the first quarter of 2018 was the acquisition of Baker Hughes, which added $2.5 billion in revenue, primarily to the Oilfield Services segment. The Digital Solutions segment also contributed positively.

Despite the substantial revenue growth, Baker Hughes reported a net loss of $19 million due to significant restructuring, impairment, and merger-related costs totaling $208 million. These costs are associated with the ongoing integration of the acquired Baker Hughes business and efforts to adjust the company's cost structure.

Baker Hughes is optimistic about continued growth in North America onshore activity but remains cautious about international markets due to commodity price volatility. Offshore project spending is also expected to be fluid, although subsea tree awards are projected to increase. The long-term outlook for Liquefied Natural Gas (LNG) is considered positive.

The company ended the quarter with $5.6 billion in cash, cash equivalents, and restricted cash. It believes that its cash on hand, cash flows from operations, and its available $3 billion revolving credit facility provide sufficient liquidity to meet its global cash needs. A substantial portion of cash is held by foreign subsidiaries, with a reinvestment strategy in active non-U.S. business operations.