10-QPeriod: Q1 FY2019

Baker Hughes Co Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 30, 2019For Securities:BKR

Summary

Baker Hughes Co. (BKR) reported its first quarter 2019 results, showing a modest increase in total revenue to $5.615 billion from $5.399 billion in the prior year's comparable quarter. The company returned to profitability, reporting a net income of $71 million, a significant improvement from a net loss of $19 million in Q1 2018. This turnaround was primarily driven by increased activity in the Oilfield Services (OFS) and Oilfield Equipment (OFE) segments, which more than offset declines in Turbomachinery & Process Solutions (TPS) and Digital Solutions (DS). The company also reported reduced restructuring and separation costs compared to the prior year, signaling progress in operational adjustments. Financially, the company ended the quarter with $3.073 billion in cash and cash equivalents. While operating activities used cash flow of $184 million, largely due to working capital needs, the company maintains a solid liquidity position supported by its available credit facilities. The ongoing separation from GE is a key theme, with new agreements finalized in the Master Agreement Framework to govern their future collaboration and position BKR for independent operation. Investors will be watching the execution of these separation strategies and the company's ability to leverage its diversified portfolio in a fluctuating energy market.

Financial Highlights

44 data points
Beta

Revenue

$5.62B

17.4% Gross Margin

Net Income

$32.00M

0.6% Net Margin

EPS (Diluted)

$0.06

Total Assets

$53.13B

Cash & Equivalents

$3.07B

Free Cash Flow

-$184.00M

Financial Statements
Beta
Revenue$5.62B
Gross Profit$976.00M
SG&A Expenses$704.00M
Operating Expenses$5.44B
Operating Income$176.00M
Net Income$32.00M
EPS (Basic)$0.06
EPS (Diluted)$0.06

Key Highlights

  • 1Total revenue increased by 4.1% to $5.615 billion in Q1 2019 compared to $5.399 billion in Q1 2018.
  • 2The company returned to net income of $71 million in Q1 2019, a substantial improvement from a net loss of $19 million in Q1 2018.
  • 3Operating income improved significantly to $176 million from a loss of $41 million in the prior year quarter.
  • 4Oilfield Services (OFS) revenue grew by 11.5% year-over-year, driven by increased activity and rig counts.
  • 5Oilfield Equipment (OFE) revenue increased by 10.7% year-over-year, primarily due to higher volumes in subsea businesses.
  • 6Restructuring, impairment, and other charges decreased to $62 million from $162 million in the prior year period.
  • 7Cash and cash equivalents stood at $3.073 billion as of March 31, 2019.

Frequently Asked Questions

In Q1 2019, Baker Hughes reported a total revenue of $5.615 billion, an increase from $5.399 billion in Q1 2018. The company also achieved a net income of $71 million, a significant turnaround from a net loss of $19 million in the prior year's quarter. This improvement was largely driven by higher revenues in the Oilfield Services and Oilfield Equipment segments and reduced restructuring costs.

The Oilfield Services (OFS) segment saw a revenue increase of 11.5% and an operating income increase, driven by higher activity. Oilfield Equipment (OFE) also experienced revenue growth of 10.7% with improved operating income. However, Turbomachinery & Process Solutions (TPS) revenue decreased by 10.9%, and Digital Solutions (DS) revenue saw a slight decrease of 1%. The overall segment operating income increased by $47 million.

GE announced its intention to separate from Baker Hughes over time. In Q1 2019, the company finalized agreements under the Master Agreement Framework, which defines commercial and technological collaborations and positions Baker Hughes for its future independent operation. These agreements cover areas like rotating equipment, digital software, and other services. The company anticipates incurring separation costs of approximately $0.2 billion to $0.3 billion over the next three years.

As of March 31, 2019, Baker Hughes had $3.073 billion in cash and cash equivalents. Operating activities used $184 million in cash during the quarter, primarily due to working capital needs and separation-related costs. The company believes its current cash, expected operational cash flows, and an available $3 billion credit facility provide sufficient liquidity to manage its global cash needs.