10-QPeriod: Q3 FY2020

Baker Hughes Co Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 23, 2020For Securities:BKR

Summary

Baker Hughes Company reported a net loss attributable to stockholders of $170 million, or $0.25 per share, for the third quarter of 2020, a significant decline compared to a net income of $57 million, or $0.11 per share, in the same period last year. This downturn was largely driven by a substantial goodwill impairment charge of $14.77 billion recorded in the first quarter of 2020, alongside ongoing impacts from the challenging oil and gas market environment influenced by the COVID-19 pandemic and price volatility. Despite the net loss, the company's revenue for the third quarter of 2020 was $5.05 billion, a decrease from $5.88 billion in the prior year's third quarter, primarily due to lower volumes in the Oilfield Services (OFS) and Digital Solutions (DS) segments. However, the Turbomachinery & Process Solutions (TPS) segment showed strength with revenue growth driven by increased equipment volume. The company maintained a strong liquidity position with $4.1 billion in cash and cash equivalents and continued to manage its operational costs and capital expenditures conservatively.

Financial Highlights

42 data points
Beta

Revenue

$5.05B

Net Income

-$170.00M

-3.4% Net Margin

EPS (Diluted)

$-0.25

Total Assets

$37.34B

Cash & Equivalents

$4.06B

Free Cash Flow

$219.00M

Financial Statements
Beta
Revenue$5.05B
SG&A Expenses$565.00M
Operating Expenses$5.10B
Operating Income-$49.00M
Net Income-$170.00M
EPS (Diluted)$-0.25

Key Highlights

  • 1Net loss attributable to Baker Hughes Company of $170 million ($0.25 per share) for Q3 2020, compared to a net income of $57 million ($0.11 per share) for Q3 2019.
  • 2Total revenue declined to $5.05 billion in Q3 2020 from $5.88 billion in Q3 2019, impacted by lower volumes in OFS and DS segments.
  • 3A significant goodwill impairment charge of $14.77 billion was recorded in Q1 2020, impacting the overall financial results.
  • 4The Turbomachinery & Process Solutions (TPS) segment demonstrated resilience, with revenue increasing by 26% year-over-year due to higher equipment volume.
  • 5Baker Hughes maintained a strong liquidity position with $4.1 billion in cash and cash equivalents as of September 30, 2020.
  • 6The company implemented a restructuring plan totaling $1.8 billion to align operations with anticipated market conditions, with $0.2 billion incurred in Q3 2020.
  • 7Significant year-over-year declines were observed in the worldwide rig count, down 53% in Q3 2020, reflecting the challenging oil and gas market.

Frequently Asked Questions

The primary driver for the net loss in Q3 2020 was the substantial goodwill impairment charge of $14.77 billion recognized in the first quarter of 2020, alongside lower revenues due to decreased activity, particularly in the Oilfield Services and Digital Solutions segments, influenced by the challenging oil and gas market and the COVID-19 pandemic.

Revenue declined overall due to lower volumes in Oilfield Services (OFS) and Digital Solutions (DS). However, the Turbomachinery & Process Solutions (TPS) segment saw a significant increase in revenue (26%) driven by higher equipment volume, while Oilfield Equipment (OFE) revenue remained relatively stable.

Baker Hughes maintained a strong liquidity position with $4.1 billion in cash and cash equivalents as of September 30, 2020. The company continues to focus on capital discipline, cash preservation, and expects its cash on hand, operating cash flows, and available credit facilities to provide sufficient liquidity for its ongoing needs.

The company is implementing a significant restructuring plan totaling $1.8 billion to right-size operations for anticipated market conditions, which includes workforce reductions and product line rationalization. They are also focusing on cost-out efforts across segments and managing capital expenditures conservatively.