10-QPeriod: Q3 FY2021

Baker Hughes Co Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 22, 2021For Securities:BKR

Summary

Baker Hughes Company reported a modest increase in revenue for the third quarter of 2021, reaching $5,093 million, up slightly from $5,049 million in the prior year's third quarter. This revenue growth was primarily driven by increased activity in the Oilfield Services (OFS), Turbomachinery & Process Solutions (TPS), and Digital Solutions (DS) segments, though partially offset by a decline in the Oilfield Equipment (OFE) segment. The company demonstrated improved profitability, with income before income taxes at $209 million in Q3 2021, a significant turnaround from a loss of $264 million in Q3 2020. This improvement reflects higher volumes, cost efficiencies, and restructuring actions taken. Despite some headwinds from supply chain disruptions and commodity cost inflation, Baker Hughes maintained a positive outlook, anticipating continued improvement in North America and international onshore activity, stabilization in offshore, and long-term strength in the LNG market.

Financial Highlights

42 data points
Beta

Revenue

$5.09B

Net Income

$8.00M

0.2% Net Margin

EPS (Diluted)

$0.01

Total Assets

$35.77B

Cash & Equivalents

$3.93B

Free Cash Flow

$416.00M

Financial Statements
Beta
Revenue$5.09B
SG&A Expenses$607.00M
Operating Expenses$4.71B
Operating Income$378.00M
Net Income$8.00M
EPS (Diluted)$0.01

Key Highlights

  • 1Revenue for the third quarter of 2021 was $5,093 million, a slight increase of 0.9% year-over-year, driven by higher volumes in OFS, TPS, and DS segments.
  • 2Income before income taxes significantly improved to $209 million in Q3 2021, compared to a loss of $264 million in Q3 2020, reflecting improved operational performance and cost management.
  • 3Oilfield Services (OFS) segment revenue increased by 4.8% to $2,419 million, primarily due to higher activity in North America, while segment operating income more than doubled to $190 million.
  • 4Turbomachinery & Process Solutions (TPS) segment revenue grew by 3.2% to $1,562 million, with operating income increasing by 45.5% to $278 million, driven by higher equipment and services volume.
  • 5Total segment operating income increased to $508 million from $349 million in the prior year's quarter, showcasing improved profitability across key segments.
  • 6The company reported $23.5 billion in remaining performance obligations (RPO) as of September 30, 2021, indicating strong future revenue potential.
  • 7Baker Hughes generated $1,600 million in cash flow from operating activities for the first nine months of 2021, a substantial increase from $927 million in the same period of 2020, highlighting improved cash generation.

Frequently Asked Questions

In Q3 2021, Baker Hughes reported revenue of $5,093 million, a slight increase from $5,049 million in Q3 2020. More significantly, the company reported income before income taxes of $209 million, a substantial improvement from a loss of $264 million in the prior year's quarter. This was driven by higher volumes in several segments and improved cost management.

The Oilfield Services (OFS) segment saw revenue increase by 4.8% to $2,419 million and operating income more than double to $190 million, driven by higher activity in North America. The Turbomachinery & Process Solutions (TPS) segment reported a 3.2% revenue increase to $1,562 million and a 45.5% increase in operating income to $278 million. The Oilfield Equipment (OFE) segment experienced a revenue decline of 17% to $603 million, with operating income decreasing to $14 million. Digital Solutions (DS) revenue grew slightly by 1% to $510 million, though operating income decreased to $26 million.

Baker Hughes anticipates continued improvement in North America and international onshore activity, driven by favorable commodity prices. They expect offshore markets to stabilize in 2021 with modest recovery in 2022. The company remains optimistic about the long-term LNG market and sees significant secular growth opportunities in industrial energy technology, particularly in areas like hydrogen, carbon capture, and other cleaner energy solutions.

As of September 30, 2021, Baker Hughes maintained a strong liquidity position with $3.9 billion in cash and cash equivalents. The company had no borrowings outstanding under its $3 billion revolving credit facility or its commercial paper program. The company's debt covenants were in compliance, and its next significant debt maturity is in December 2022.