Baker Hughes Company Announces Third-Quarter 2024 Results
Third-quarter highlights
Orders of $6.7 billion, including $2.9 billion of IET orders.
RPO of $33.4 billion, including record IET RPO of $30.2 billion.
Revenue of $6.9 billion, up 4% year-over-year.
Attributable net income of $766 million.
GAAP diluted EPS of $0.77 and adjusted diluted EPS* of $0.67.
Adjusted EBITDA* of $1,208 million, up 23% year-over-year.
Cash flows from operating activities of $1,010 million and free cash flow* of $754 million.
Returns to shareholders of $361 million, including $152 million of share repurchases.
HOUSTON and LONDON, Oct. 22, 2024 (GLOBE NEWSWIRE) -- Baker Hughes Company (NASDAQ:BKR) ("Baker Hughes" or the "Company") announced results today for the third quarter of 2024.
"We delivered another quarter of record EBITDA, highlighted by exceptional operational performance across both segments. Our margins continue to improve at an accelerated pace, with total company EBITDA margins increasing to 17.5%. This marks the highest margin quarter since the company was formed. On the back of our solid third-quarter results and stable outlook, we remain confident in achieving our full-year EBITDA guidance midpoint," said Lorenzo Simonelli, Baker Hughes Chairman and Chief Executive Officer.
"Orders remain at solid levels, with IET orders of $2.9 billion marking the eighth consecutive quarter at or above these levels. IET continued to demonstrate strong order momentum for gas infrastructure and FPSOs, booking the largest ever ICL compressor award from Dubai Petroleum Establishment for the Margham Gas storage facility and two FPSO awards with separate offshore operators."
"Overall, our segments continue to make strong progress on their journey toward 20% EBITDA margins, with both segments achieving high-teen margins during the quarter. Our operational discipline and rigor continue to gain traction."
"We are also benefiting from the life-cycle attributes of our service offerings and the breadth of our portfolio. With significant recurring IET service revenue, strong production-levered businesses, untapped market opportunities, and improved cost structure, we are becoming less cyclical and capable of generating more durable earnings and free cash flow across cycles."
"We are successfully executing our strategy, and this is a testament to the strength of our people and the culture we are building," concluded Simonelli.
* Non-GAAP measure. See reconciliations in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures."
Three Months Ended
Variance
(in millions except per share amounts)
September 30,2024
June 30,2024
September 30,2023
Sequential
Year-over-year
Orders
$
6,676
$
7,526
$
8,512
(11%)
(22%)
Revenue
6,908
7,139
6,641
(3%)
4%
Net income attributable to Baker Hughes
766
579
518
32%
48%
Adjusted net income attributable to Baker Hughes*
666
568
427
17%
56%
Operating income
930
833
714
12%
30%
Adjusted operating income*
930
847
716
10%
30%
Adjusted EBITDA*
1,208
1,130
983
7%
23%
Diluted earnings per share (EPS)
0.77
0.58
0.51
33%
51%
Adjusted diluted EPS*
0.67
0.57
0.42
18%
59%
Cash flow from operating activities
1,010
348
811
F
25%
Free cash flow*
754
106
592
F
27%
* Non-GAAP measure. See reconciliations in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures."
"F" is used when variance is above 100%. Additionally, "U" is used when variance is below (100)%.
Certain columns and rows in our tables and financial statements may not sum up due to the use of rounded numbers.
Quarter Highlights
Industrial & Energy Technology ("IET") experienced a strong quarter for its Integrated Compressor Line ("ICL") technology. In its largest ICL award to-date, and booked under Climate Technology Solutions ("CTS"), Baker Hughes will supply 10 units to Dubai Petroleum Establishment for the Margham Gas storage facility. These ICL units will support gas infrastructure, providing stability to Dubai's energy supply by strengthening the system's ability to switch between natural gas and solar power.
IET's Gas Technology Equipment ("GTE") was also awarded a significant contract to supply advanced compression solutions to Saipem for TotalEnergies' all-electric Kaminho Floating Production Storage and Offloading ("FPSO") project in Angola. Baker Hughes' centrifugal BCL compressor and ICL technology were selected because of the capability to minimize greenhouse emissions and eliminate routine flaring by reinjecting associated gas into the reservoir for storage. Separately, IET was selected to provide electric motor-driven process compressors for an FPSO project in Latin America.
IET's Gas Technology Services ("GTS") secured a multi-decade agreement for an LNG facility in the Middle East. The scope encompasses extensive maintenance services and digital solutions, leveraging Baker Hughes' iCenter™ Remote Monitoring and Diagnostics capabilities.
Oilfield Services & Equipment ("OFSE") strengthened the Company's relationship with Petrobras, receiving contracts to supply 43 miles of flexible pipe systems in Brazil's Santos Basin. A significant portion of these risers and flowlines will be manufactured in-country at Baker Hughes' Niteroi plant. The contracts, awarded through an open tender, include multi-year service agreements to support maintenance activities through the life of the project and demonstrate Baker Hughes' dedication to providing equipment and services critical to help Petrobras achieve its strategic plan to expand operations.
In OFSE, mature assets solutions ("MAS") delivered a strong order quarter, illustrating confidence in the Company's full range of workflows and solutions to accelerate production and total recovery. OFSE won a MAS award to supply Santos Energy's strategic and historic Cooper Basin Development in Australia with drilling fluids and wireline services, marking Baker Hughes' return to the basin. Additionally, OFSE signed a multi-year contract extension with a customer in the Middle East for completions and well intervention.
Baker Hughes saw increased adoption of Leucipa™, the Company's intelligent automated field production digital solution. A major global operator expanded the use of Leucipa across multiple fields in the Permian Basin, enabling the customer to optimize production through real-time field orchestration to generate lower-carbon, short-cycle barrels. Additionally, a new strategic collaboration was established early in the fourth quarter with Repsol, a major customer of Leucipa, to develop and deploy next-generation artificial intelligence capabilities for this digital solution. The companies will share knowledge and expertise to optimize and enhance production across Repsol's global portfolio while creating new commercial opportunities for Baker Hughes.
Baker Hughes continues to innovate new digital technologies to support customers on their decarbonization journey. The Company launched CarbonEdge™, powered by Cordant™, an end-to-end, risk-based digital solution that delivers precise, real-time data and alerts on carbon dioxide (CO2) flows across CCUS infrastructure from subsurface to surface. This solution enables operators to mitigate risk, improve decision-making, enhance operational efficiency, and simplify regulatory reporting across the entire project lifecycle.
Consolidated Revenue and Operating Income by Reporting Segment
(in millions)
Three Months Ended
Variance
September 30,2024
June 30,2024
September 30,2023
Sequential
Year-over-year
Oilfield Services & Equipment
$
3,963
$
4,011
$
3,951
(1%)
—%
Industrial & Energy Technology
2,945
3,128
2,691
(6%)
9%
Segment revenue
6,908
7,139
6,641
(3%)
4%
Oilfield Services & Equipment
547
493
465
11%
18%
Industrial & Energy Technology
474
442
346
7%
37%
Corporate(1)
(91
)
(88
)
(95
)
(3%)
4%
Restructuring, impairment & other
—
(14
)
(2
)
F
F
Operating income
930
833
714
12%
30%
Adjusted operating income*
930
847
716
10%
30%
Depreciation & amortization
278
283
267
(2%)
4%
Adjusted EBITDA*
$
1,208
$
1,130
$
983
7%
23%
* Non-GAAP measure. See reconciliations in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures."
"F" is used when variance is above 100%. Additionally, "U" is used when variance is below (100)%.
(1) Corporate costs are primarily reported in "Selling, general and administrative" in the condensed consolidated statements of income (loss).
Revenue for the quarter was $6,908 million, a decrease of 3% sequentially and an increase of 4% year-over-year. The increase in revenue year-over-year was driven by IET.
The Company's total book-to-bill ratio in the quarter was 1.0; the IET book-to-bill ratio in the quarter was also 1.0.
Operating income as determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"), for the third quarter of 2024 was $930 million. Operating income increased $97 million sequentially and increased $216 million year-over-year.
Adjusted operating income (a non-GAAP financial measure) for the third quarter of 2024 was $930 million. There were no adjustments to operating income in the third quarter. A list of the adjusting items and associated reconciliation from GAAP has been provided in Table 1a in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures." Adjusted operating income for the third quarter of 2024 was up 10% sequentially and up 30% year-over-year.
Depreciation and amortization for the third quarter of 2024 was $278 million.
Adjusted EBITDA (a non-GAAP financial measure) for the third quarter of 2024 was $1,208 million. There were no adjustments to EBITDA in the third quarter. See Table 1b in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures." Adjusted EBITDA for the third quarter was up 7% sequentially and up 23% year-over-year.
The sequential increase in adjusted operating income and adjusted EBITDA was driven by higher pricing in both segments and structural cost-out initiatives, partially offset by lower volume in both segments. The year-over-year increase in adjusted operating income and adjusted EBITDA was driven by higher pricing in both segments, higher volume in IET, and structural cost-out initiatives, partially offset by cost inflation in IET and unfavorable business mix in both segments.
Other Financial Items
Remaining Performance Obligations ("RPO") in the third quarter ended at $33.4 billion, a decrease of $0.1 billion from the second quarter of 2024. OFSE RPO was $3.2 billion, down 5% sequentially, while IET RPO was $30.2 billion, up $44 million sequentially. Within IET RPO, GTE RPO was $11.9 billion and GTS RPO was $14.8 billion.
Income tax expense in the third quarter of 2024 was $235 million.
Other non-operating income in the third quarter of 2024 was $134 million. Included in other non-operating income were net mark-to-market gains in fair value for certain equity investments of $99 million.
GAAP diluted earnings per share was $0.77. Adjusted diluted earnings per share (a non-GAAP financial measure) was $0.67. Excluded from adjusted diluted earnings per share were all items listed in Table 1c in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures."
Cash flow from operating activities was $1,010 million for the third quarter of 2024. Free cash flow (a non-GAAP financial measure) for the quarter was $754 million. A reconciliation from GAAP has been provided in Table 1d in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures."
Capital expenditures, net of proceeds from disposal of assets, were $256 million for the third quarter of 2024, of which $182 million for OFSE and $62 million for IET.
Results by Reporting Segment
The following segment discussions and variance explanations are intended to reflect management's view of the relevant comparisons of financial results on a sequential or year-over-year basis, depending on the business dynamics of the reporting segments.
Oilfield Services & Equipment
(in millions)
Three Months Ended
Variance
Segment results
September 30,2024
June 30,2024
September 30,2023
Sequential
Year-over-year
Orders
$
3,807
$
4,068
$
4,178
(6%)
(9%)
Revenue
$
3,963
$
4,011
$
3,951
(1%)
—%
Operating income
$
547
$
493
$
465
11%
18%
Operating margin
13.8
%
12.3
%
11.8
%
1.5pts
2pts
Depreciation & amortization
$
218
$
223
$
206
(2%)
6%
EBITDA*
$
765
$
716
$
670
7%
14%
EBITDA margin*
19.3
%
17.8
%
17.0
%
1.5pts
2.3pts
(in millions)
Three Months Ended
Variance
Revenue by Product Line
September 30,2024
June 30,2024
September 30,2023
Sequential
Year-over-year
Well Construction
$
1,050
$
1,090
$
1,128
(4%)
(7%)
Completions, Intervention & Measurements
1,009
1,118
1,085
(10%)
(7%)
Production Solutions
983
958
967
3%
2%
Subsea & Surface Pressure Systems
921
845
770
9%
20%
Total Revenue
$
3,963
$
4,011
$
3,951
(1%)
—%
(in millions)
Three Months Ended
Variance
Revenue by Geographic Region
September 30,2024
June 30,2024
September 30,2023
Sequential
Year-over-year
North America
$
971
$
1,023
$
1,064
(5%)
(9%)
Latin America
648
663
695
(2%)
(7%)
Europe/CIS/Sub-Saharan Africa
933
827
695
13%
34%
Middle East/Asia
1,411
1,498
1,497
(6%)
(6%)
Total Revenue
$
3,963
$
4,011
$
3,951
(1%)
—%
North America
$
971
$
1,023
$
1,064
(5%)
(9%)
International
2,992
