10-QPeriod: Q3 FY2023

Baker Hughes Co Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 26, 2023For Securities:BKR

Summary

Baker Hughes Company reported a strong third quarter of 2023, with total revenue increasing by 24% year-over-year to $6.64 billion. This growth was primarily driven by higher volumes in both the Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET) segments. Income before income taxes saw a significant improvement, rising to $759 million from $144 million in the prior year's quarter, benefiting from increased volumes, pricing, cost-out initiatives, and lower restructuring charges. For the first nine months of 2023, revenue grew 22% to $18.67 billion, with substantial contributions from both segments. Net income for the nine-month period was $1.52 billion, a marked turnaround from a net loss of $766 million in the same period of 2022. The company highlighted its optimism for the oil and gas outlook, particularly international and offshore markets, and the continued strength in LNG projects, while acknowledging ongoing economic uncertainties and geopolitical risks. Baker Hughes also continued its transformation journey, focusing on efficiency and organizational streamlining.

Financial Highlights

43 data points
Beta

Revenue

$6.64B

Net Income

$518.00M

7.8% Net Margin

Total Assets

$36.55B

Cash & Equivalents

$3.20B

Free Cash Flow

$810.00M

Financial Statements
Beta
Revenue$6.64B
SG&A Expenses$627.00M
Operating Expenses$5.93B
Operating Income$714.00M
Net Income$518.00M

Key Highlights

  • 1Total revenue for Q3 2023 increased by 24% to $6.64 billion compared to Q3 2022, driven by volume growth in both OFSE and IET segments.
  • 2Income before income taxes significantly improved to $759 million in Q3 2023 from $144 million in Q3 2022, due to higher volumes, pricing, cost efficiencies, and reduced charges.
  • 3For the first nine months of 2023, revenue rose 22% to $18.67 billion, and net income turned positive at $1.52 billion, a substantial improvement from a net loss of $766 million in the prior year's period.
  • 4Oilfield Services & Equipment (OFSE) revenue grew 16% year-over-year in Q3 2023, supported by increased international activity and volume growth across most regions.
  • 5Industrial & Energy Technology (IET) revenue increased by 37% year-over-year in Q3 2023, primarily driven by higher volumes in Gas Technology Equipment and Industrial Technology.
  • 6The company reported strong order growth of 40% in Q3 2023, reaching $8.5 billion, with significant increases in both OFSE and particularly IET.
  • 7Baker Hughes maintained a strong liquidity position with $3.2 billion in cash and cash equivalents as of September 30, 2023, and an undrawn $3 billion revolving credit facility.

Frequently Asked Questions

Revenue growth in the third quarter of 2023 was primarily driven by increased volumes in both the Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET) segments. Higher activity levels, particularly in international OFSE markets and strong performance in IET's Gas Technology Equipment, contributed significantly to the 24% year-over-year revenue increase.

Profitability saw a substantial improvement. Income before income taxes increased from $144 million in Q3 2022 to $759 million in Q3 2023. This was due to a combination of higher revenue from increased volumes and pricing, the positive impact of cost-out initiatives, lower restructuring and impairment charges, and a favorable change in the fair value of certain equity investments.

Baker Hughes remains optimistic about the long-term oil and gas outlook, especially in international and offshore markets, and sees continued momentum in LNG projects. They anticipate a multiyear upstream spending cycle. However, the company acknowledges persistent economic uncertainty and geopolitical risks, such as the conflict in the Middle East, which could impact operations. They expect continued growth in new energy solutions focused on emissions reduction.

As of September 30, 2023, Baker Hughes reported $3.2 billion in cash and cash equivalents, an increase from the end of 2022. The company also has a $3 billion unsecured revolving credit facility that was undrawn. Total debt remained stable at approximately $6.66 billion, and the company stated it was in compliance with all debt covenants. The next debt maturity is in December 2023.