Baker Hughes Co Quarterly Report for Q3 Ended Sep 30, 2018

Summary

Baker Hughes, a GE company (BHGE) reported an increase in revenue for the third quarter of 2018 to $5.67 billion, up from $5.30 billion in the prior year period, primarily driven by higher activity in the Oilfield Services (OFS) segment. Net income attributable to Baker Hughes, a GE company, was $13 million, a significant improvement from a net loss of $134 million in the same quarter of the previous year. The company also saw an increase in cash flow from operations to $673 million for the first nine months of 2018, a notable turnaround from a negative $585 million in the comparable period of 2017. The company's outlook remains cautiously optimistic, anticipating continued growth in North America onshore activity and moderate growth internationally, supported by stabilizing commodity prices which are beginning to spur offshore project decisions and LNG development. Despite the positive revenue and net income trends, the company incurred significant merger and related costs ($17 million in Q3 2018) and restructuring/impairment charges ($66 million in Q3 2018) as it continued to adjust its operations. The company also noted a substantial decrease in its cash, cash equivalents, and restricted cash balance to $4.77 billion from $7.03 billion at the end of 2017, mainly due to financing activities including debt repayment, dividends, and share repurchases. GE's ongoing separation plan from BHGE, expected over the next 2-3 years, suggests a strategic shift for the company as it aims for greater independence.

Key Highlights

• 1Revenue increased by 7% year-over-year to $5.67 billion in Q3 2018, driven by strong performance in Oilfield Services (OFS).
• 2Achieved net income attributable to Baker Hughes of $13 million in Q3 2018, a significant improvement from a net loss of $134 million in Q3 2017.
• 3Cash flow from operating activities for the first nine months of 2018 was $673 million, a substantial recovery from -$585 million in the prior year period.
• 4The company is experiencing increased activity in North America onshore and anticipates continued growth for the remainder of 2018.
• 5Restructuring, impairment, and merger-related costs totaled $83 million in Q3 2018, indicating ongoing integration and operational adjustments.
• 6Total debt decreased to $7.29 billion from $8.35 billion at the end of 2017, reflecting proactive debt management.
• 7The company is navigating a period of strategic transition with GE's planned separation over the next 2-3 years.

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