10-QPeriod: Q3 FY2022

Baker Hughes Co Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 20, 2022For Securities:BKR

Summary

Baker Hughes Company (BKR) reported its third quarter 2022 financial results, indicating a year-over-year increase in total revenue to $5.37 billion, up from $5.09 billion in Q3 2021. This revenue growth was primarily driven by increased activity in the Oilfield Services (OFS) and Digital Solutions (DS) segments. However, operating income saw a notable decrease to $269 million from $378 million in the prior year's quarter. This decline was significantly influenced by higher restructuring, impairment, and other charges, totaling $230 million in Q3 2022, compared to only $14 million in Q3 2021. The company also recorded a substantial loss of $426 million related to its Oilfield Services business in Russia, which was classified as held for sale. Despite the decline in operating income, the company's backlog of remaining performance obligations remained strong at $24.7 billion as of September 30, 2022. Baker Hughes is actively managing the dynamic macro environment, including inflationary pressures and geopolitical uncertainties, by focusing on operational execution and strategic initiatives such as reorganizing into two reporting segments (OFSE and IET) effective October 1, 2022, and pursuing strategic acquisitions to complement its portfolio.

Financial Highlights

43 data points
Beta

Revenue

$5.37B

Net Income

-$17.00M

-0.3% Net Margin

EPS (Diluted)

$-0.02

Total Assets

$33.16B

Cash & Equivalents

$2.85B

Free Cash Flow

$597.00M

Financial Statements
Beta
Revenue$5.37B
SG&A Expenses$620.00M
Operating Expenses$5.10B
Operating Income$269.00M
Net Income-$17.00M
EPS (Diluted)$-0.02

Key Highlights

  • 1Total revenue increased by 5% year-over-year to $5.37 billion, driven by higher activity in Oilfield Services (OFS) and Digital Solutions (DS).
  • 2Operating income decreased to $269 million from $378 million in Q3 2021, primarily due to $230 million in restructuring, impairment, and other charges.
  • 3Net loss attributable to Baker Hughes Company was $17 million, or ($0.02) per share, compared to a net income of $8 million, or $0.01 per share, in Q3 2021.
  • 4The company recorded a $426 million loss on its Oilfield Services (OFS) Russia business, which has been classified as held for sale.
  • 5Remaining Performance Obligations (RPO) stood at a robust $24.7 billion as of September 30, 2022, indicating future revenue potential.
  • 6Baker Hughes announced a reorganization into two reportable segments: Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET), effective October 1, 2022.
  • 7Cash flows from operating activities for the first nine months of 2022 were $990 million, a decrease from $1.6 billion in the same period of 2021, largely due to working capital usage.

Frequently Asked Questions

Revenue increased by 5% to $5.37 billion compared to the prior year's third quarter. This growth was primarily driven by increased activity in the Oilfield Services (OFS) and Digital Solutions (DS) segments, supported by higher global rig counts and improved international activity.

Operating income decreased to $269 million from $378 million in the prior year's third quarter. This reduction was significantly impacted by higher restructuring, impairment, and other charges, which totaled $230 million in Q3 2022, up from $14 million in Q3 2021. Additionally, a $426 million loss was recognized related to the Oilfield Services business in Russia, which is classified as held for sale.

The $24.7 billion in RPO as of September 30, 2022, represents the total value of contracts with customers that are yet to be fulfilled. This substantial backlog indicates future revenue streams and provides visibility into the company's ongoing business commitments.

The sale of the OFS Russia business, which resulted in a significant loss, removes a geopolitical and operational challenge. The announced restructuring into two segments (OFSE and IET) is designed to simplify operations, enhance profitability, and improve long-term strategic optionality. While these actions involve upfront costs, they are aimed at positioning Baker Hughes for better performance and growth in evolving market conditions.