10-QPeriod: Q1 FY2020

Baker Hughes Co Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 24, 2020For Securities:BKR

Summary

Baker Hughes Company reported a significant net loss of $10.21 billion ($15.64 per share) for the first quarter of 2020, a stark contrast to the $32 million net income ($0.06 per share) in the same period last year. This dramatic swing was primarily driven by a massive goodwill impairment charge of $14.77 billion, stemming from the severe downturn in oil and gas prices and the economic uncertainty caused by the COVID-19 pandemic. Revenue also saw a slight decline of 3% to $5.43 billion from $5.62 billion year-over-year, impacted by reduced activity in Digital Solutions and Turbomachinery & Process Solutions segments. Despite the significant loss, the company maintained a solid liquidity position with $3.0 billion in cash and cash equivalents and an undrawn $3 billion revolving credit facility. Management is actively taking steps to navigate the challenging market, including a $1.8 billion restructuring plan to align operations with anticipated activity levels and preserve cash. The outlook for the oil and gas industry remains volatile, with expectations of significant declines in North America drilling and completion spending.

Financial Highlights

39 data points
Beta

Revenue

$5.42B

Net Income

-$10.23B

-188.5% Net Margin

Total Assets

$37.23B

Cash & Equivalents

$3.01B

Free Cash Flow

$478.00M

Financial Statements
Beta
Revenue$5.42B
SG&A Expenses$675.00M
Operating Expenses$21.48B
Operating Income-$16.06B
Net Income-$10.23B

Key Highlights

  • 1Reported a net loss attributable to Baker Hughes Company of $10.21 billion for Q1 2020, a significant deterioration from a $32 million net income in Q1 2019.
  • 2Recorded a substantial goodwill impairment charge of $14.77 billion, significantly impacting profitability.
  • 3Total revenue decreased by 3% to $5.43 billion in Q1 2020 compared to $5.62 billion in Q1 2019, driven by volume declines in Digital Solutions and Turbomachinery & Process Solutions.
  • 4The company implemented a $1.8 billion restructuring plan to align operations with anticipated activity levels and market conditions.
  • 5Maintained a strong liquidity position with $3.0 billion in cash and cash equivalents and an undrawn $3 billion revolving credit facility.
  • 6Experienced a 9% decrease in worldwide rig count to 2,055 in Q1 2020 compared to Q1 2019, with a 20% decline in North America.
  • 7Oilfield Services segment showed revenue growth of 5% to $3.14 billion, driven by increased international activity, while other segments experienced revenue declines.

Frequently Asked Questions

The significant net loss of $10.21 billion was primarily due to a goodwill impairment charge of $14.77 billion. This impairment was triggered by the severe downturn in oil and gas prices and the economic uncertainty related to the COVID-19 pandemic, which negatively impacted the company's market capitalization and the fair value of its reporting units.

Total revenue decreased by 3% to $5.43 billion in the first quarter of 2020 compared to $5.62 billion in the same period last year. This decline was mainly attributed to lower volumes in the Digital Solutions and Turbomachinery & Process Solutions segments, influenced by the COVID-19 pandemic.

The company anticipates continued volatility in the oil and gas markets for the remainder of 2020, with expectations for significant declines in North America drilling and completion spending. In response, Baker Hughes has approved a $1.8 billion restructuring plan to align operations with anticipated activity levels, preserve cash, and maintain financial flexibility.

Baker Hughes maintains a strong liquidity position with $3.0 billion in cash and cash equivalents as of March 31, 2020. The company also has access to an undrawn $3 billion revolving credit facility. Total debt remains manageable, and the company was in compliance with all debt covenants as of the reporting date.