- Orders of $4.5 billion for the quarter, down 12% sequentially
and down 18% year-over-year.
- Revenue of $4.8 billion for the quarter, down 13% sequentially
and down 12% year-over-year.
- GAAP operating income of $164 million for the quarter, down 10%
sequentially and favorable year-over-year.
- Adjusted operating income (a non-GAAP measure) of $270 million
for the quarter was down 42% sequentially and up 13%
year-over-year.
- Adjusted EBITDA* (a non-GAAP measure) of $562 million for the
quarter was down 27% sequentially and down 5% year-over-year.
- GAAP loss per share of $(0.61) for the quarter which included
$0.73 per share of adjusting items. Adjusted earnings per share (a
non-GAAP measure) was $0.12.
- Cash flows generated from operating activities were $678
million for the quarter. Free cash flow (a non-GAAP measure) for
the quarter was $498 million.
The Company presents its financial results in accordance with
GAAP. However, management believes that using additional non-GAAP
measures will enhance the evaluation of the profitability of the
Company and its ongoing operations. Please see reconciliations in
the section entitled "Reconciliation of GAAP to non-GAAP Financial
Measures." See Exhibit 99.2 for additional reconciliations of
certain GAAP to non-GAAP financial measures as a Financial
Supplement to this earnings release. Certain columns and rows in
our tables and financial statements may not sum up due to the use
of rounded numbers.
*Adjusted EBITDA (a non-GAAP measure) is defined as operating
income (loss) excluding depreciation & amortization and
operating income adjustments
Baker Hughes Company (NYSE: BKR) ("Baker Hughes" or the
"Company") announced results today for the first quarter of
2021.
Three Months Ended
Variance
(in millions except per share amounts)
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Orders
$
4,541
$
5,188
$
5,532
(12)%
(18)%
Revenue
4,782
5,495
5,425
(13)%
(12)%
Operating income (loss)
164
182
(16,059)
(10)%
F
Adjusted operating income (non-GAAP)
270
462
240
(42)%
13%
Adjusted EBITDA (non-GAAP)
562
770
594
(27)%
(5)%
Net income (loss) attributable to Baker
Hughes
(452)
653
(10,227)
U
96%
Adjusted net income (loss) (non-GAAP)
attributable to Baker Hughes
91
(50)
70
F
30%
EPS attributable to Class A
shareholders
(0.61)
0.91
(15.66)
U
96%
Adjusted EPS (non-GAAP) attributable to
Class A shareholders
0.12
(0.07)
0.11
F
14%
Cash flow from operating activities
678
378
478
79%
42%
Free cash flow (non-GAAP)
498
250
152
99%
F
"F" is used in most instances when variance is above 100%.
Additionally, "U" is used in most instances when variance is below
(100)%.
“We are pleased with our first quarter results as we generated
strong free cash flow, continued to drive forward our cost-out
efforts, and took further meaningful steps in the execution of our
strategy. During the quarter, TPS delivered solid orders and
operating income while OFS continued to execute cost-out programs
to help drive another strong quarter of margin performance. We also
advanced our position in the energy transition, investing in
strategic areas for growth and entering important partnerships to
advance new energy frontiers including hydrogen and carbon capture,
utilization and storage. I want to thank our employees for their
continued hard work and commitment to safety,” said Lorenzo
Simonelli, Baker Hughes chairman and chief executive officer.
“As we look ahead to the rest of 2021, we remain cautiously
optimistic that the global economy and oil demand will recover from
the impact of the global pandemic. We expect spending and activity
levels to gain momentum through the year as the macro environment
improves, likely setting up the industry for stronger growth in
2022.
“We remain focused on executing our strategy, and are well
positioned to benefit from an economic recovery while leading the
energy transition and the journey to net-zero. We will continue to
take energy forward by supporting our customers, staying
disciplined on our strategic priorities, and delivering for our
shareholders,” concluded Simonelli.
Quarter Highlights
Supporting our Customers
The OFS segment executed a major software deployment for Saudi
Aramco, deploying its WellLink™ service to deliver real-time data
visualization and analysis across all Saudi Aramco drilling
activities. The five-year contract was awarded in 2020 and includes
a detailed planning phase to transition from the incumbent provider
to Baker Hughes. Using WellLink, Saudi Aramco personnel can
collaborate and make decisions using a single view of data, paving
the way for the use of artificial intelligence to enhance
operations. Despite significant pandemic-related challenges, the
deployment was completed 50% faster than planned and used local
resources extensively.
Baker Hughes continued to invest in localization for Saudi
Arabia. In addition to the WellLink deployment project, Saudi
Aramco awarded OFS a five-year drill bits contract, supported by
the Baker Hughes drill bits manufacturing facility in Dhahran. The
facility recently expanded its capabilities and has produced more
than 15,000 drill bits since beginning operations a decade ago. OFS
also inaugurated its completions manufacturing center in Saudi
Arabia to support growth plans and add in-country value.
The TPS segment continued to maintain its leadership in FPSO and
LNG with several offshore topside contracts in Latin America and
Asia. In Latin America, TPS was awarded a contract for multiple
FPSOs, including one of the world’s largest units, to provide power
generation systems, compression trains for gas reinjection, CO2
compression services and water injection centrifugal pumps. In
Asia, TPS secured a topside offshore contract to provide three
aeroderivative gas turbine-driven compressor units for a fixed
platform. TPS also continued to strengthen long-term relationships
with key customers, achieving a major milestone by securing a
10-year services contract extension in Malaysia for one of the
largest LNG facilities in the world.
The DS segment continued to expand across industrial end
markets, including marine, aerospace, electronics, and pulp and
paper. The Bently Nevada product line signed a multi-year agreement
with P&O Maritime Logistics to supply a hybrid condition-based
monitoring solution that combines the VitalyX lubrication oil
monitoring solution with Bently Nevada’s vibration monitoring and
Host Remote Monitoring & Diagnostic service. By combining oil
and vibration monitoring, Bently Nevada can provide greater
protection against asset loss and ensure valuable uptime for over
180 assets on 19 P&O Maritime Logistics vessels in its Caspian
fleet. This cloud-based subscription contract is the first of its
kind for both P&O Maritime Logistics and Bently Nevada.
Bently Nevada also secured a contract to supply plant-wide
condition monitoring solutions for Arauco’s pulp and paper plant in
Chile, one of the main global players in wood pulp and bioenergy.
The brownfield contract includes hardware, software and services
support of 900+ sensors integrated to System 1 software for 450
machines across three sites, increasing productivity and efficiency
of Arauco’s operations. In the industrial inspections segment, the
Waygate Technologies (WT) product line secured multiple orders from
one of the world's leading battery manufacturers in Asia. The
customer has initiated a global roll-out project with WT's Phoenix
CT systems to inspect lithium ion batteries for electric
vehicles.
DS secured major contracts to advance customers’ energy
transition goals, helping to reduce methane and carbon emissions as
well as improve efficiencies. The Panametrics product line secured
several orders for the Flare.IQ advanced flare gas monitoring and
optimization system, with contracts for oil and gas operators in
North America, China and the U.A.E. The Druck product line secured
a number of significant contracts across North America and China to
supply pressure sensors to improve aircraft fuel efficiency. This
included one of the largest aerospace engine contracts in Druck’s
history, a 25-year deal, and strengthened Baker Hughes’ leadership
position with aerospace OEMs.
Executing on Priorities
Baker Hughes made progress in strategically positioning the
company for new frontiers, announcing new collaborations to advance
industrial decarbonization and low- to zero-carbon solutions:
- Signed a cooperation agreement with PAO NOVATEK to decarbonize
natural gas and LNG production by developing and implementing
innovative compression and power generation technologies for
NOVATEK’s LNG projects. The agreement will begin with a pilot
program to introduce hydrogen blends into the main process for
natural gas liquefaction to reduce carbon dioxide emissions from
LNG export terminals including NOVATEK’s Yamal LNG complex.
- Signed a memorandum of understanding (MOU) with Horisont Energi
AS for the Polaris offshore carbon storage facility in Norway to
explore the development and integration of technologies to minimize
the footprint, cost and delivery time for carbon capture, transport
and storage. The Polaris facility is part of the “Barents Blue”
project, the first global and full-scale carbon neutral “blue”
ammonia production plant. The project is expected to have a total
carbon storage capacity of 100+ million tons, equivalent to twice
Norway’s annual greenhouse gas emissions.
- Acquired from SRI International an exclusive license for the
use of Mixed Salt Process technology for carbon capture
applications including fossil-fueled power plants, gas turbines,
industrial applications, and the cement industry. The agreement
further expands and complements Baker Hughes’ CCUS technology
portfolio offering as it strategically positions to be able to
offer customers a variety of solutions based on project size,
design requirements and plant location.
The OFS and OFE segments continued to transform core operations
and improve productivity and profitability, developing new business
models and exiting product lines and geographies that did not meet
strong return requirements. OFS completed the sale of pressure
pumping assets in Argentina’s Neuquén Basin to Tenaris, including a
hydraulic fracturing fleet, coiled tubing unit and related
equipment. OFE announced a joint venture company (JV) with Akastor
ASA to combine Baker Hughes’ Subsea Drilling Systems business with
Akastor’s subsidiary, MHWirth AS. The new JV will deliver global
offshore drilling solutions to better serve customers while driving
productivity and cost synergies.
OFS continued to see growth in the Chemicals product line with a
five-year production chemicals contract from a major operator in
Guyana and one of the largest Chemicals contracts in Baker Hughes
history. As part of the contract, Baker Hughes developed a new
oilfield chemicals technology solution in record time to meet
specific regional production challenges. Notably, Chemicals also
secured a five-year production chemicals contract for multiple
deep-water blocks in Angola, and a five-year contract for specialty
chemicals and services in offshore Norway.
OFE expanded its non-metallic materials portfolio and won
multiple contracts in its Flexible Pipe Systems (FPS) product
lines. A new onshore composite flexible pipe was launched in
January, addressing the corrosion and cost of ownership challenges
with conventional steel pipes for the energy and industrial
sectors. The lightweight reinforced thermoplastic pipe (RTP) is
manufactured at a state-of-the-art Houston facility, and the
spoolable design can reduce installation costs by more than 20%.
This technology has been well received and has led to early
adoption by two customers within the quarter.
DS expanded its industrial asset performance management (APM)
portfolio by acquiring ARMS Reliability, a leading global provider
of reliability solutions deploying reliability engineering, data
capture, integration, visualization, and analytics to improve the
reliability and availability of physical assets. The acquisition
closed on April 1, positioning Bently Nevada as a comprehensive
industrial asset management platform with a full spectrum of APM
services and extended plant-level coverage for industrial
customers. ARMS Reliability’s current customer base includes the
mining, oil and gas, power generation, manufacturing, and utility
segments.
Leading with Innovation
Baker Hughes continued to develop technologies to advance the
energy transition, improve efficiencies, reduce emissions and
accelerate the digital transformation of industrial segments.
BakerHughesC3.ai (BHC3) released its latest application, BHC3
Production Schedule Optimization (PSO). PSO improves supply chain
and delivery performance for highly engineered products while
minimizing manufacturing costs. The application generates
industrial customer demand predictions and optimal production
schedules using a holistic view of buyer activity, supply chain
materials, and manufacturing and distribution options. PSO is the
third BHC3 AI-based application released since the alliance was
formed in 2019 and allows for further customer penetration in the
downstream oil and gas segment.
OFS continued to innovate to reduce emissions and environmental
footprint for customers. The Artificial Lift and Completions
product lines secured a contract to supply equipment and services
for the first wireline-retrievable electric submersible pumping
(ESP) system in Italy. This latest ESP technology was developed in
collaboration with channel partner AccessESP and will allow the
customer to reduce its carbon footprint, minimize deferred
production, and reduce workover costs by eliminating the need for a
rig during ESP change-out operations.
OFS is also utilizing novel plug and abandonment (P&A)
technologies to decommission wells in Europe in a more
environmentally friendly, less emissive way. In one project in the
Netherlands, the Baker Hughes HEAVY METAL section milling service
was paired with a rigless P&A unit to reduce metal waste by
288,000 pounds and reduce carbon dioxide emissions by 73% compared
to the incumbent’s services.
Consolidated Results by Reporting
Segment
Consolidated Orders by Reporting
Segment
(in millions)
Three Months Ended
Variance
Consolidated segment orders
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Oilfield Services
$
2,200
$
2,266
$
3,147
(3)
%
(30)
%
Oilfield Equipment
345
561
492
(39)
%
(30)
%
Turbomachinery & Process Solutions
1,447
1,832
1,394
(21)
%
4
%
Digital Solutions
549
528
500
4
%
10
%
Total
$
4,541
$
5,188
$
5,532
(12)
%
(18)
%
Orders for the quarter were $4,541 million, down 12%
sequentially and down 18% year-over-year. The sequential decrease
was a result of lower order intake in Oilfield Equipment and
Turbomachinery & Process Solutions, partially offset by growth
in Digital Solutions. Equipment orders were down 23% sequentially
and service orders were down 4%.
Year-over-year, the decline in orders was a result of lower
order intake in Oilfield Services and Oilfield Equipment, partially
offset by growth in Digital Solutions and Turbomachinery &
Process Solutions. Year-over-year equipment orders were down 18%
and service orders were down 18%.
The Company's total book-to-bill ratio in the quarter was 0.9;
the equipment book-to-bill ratio in the quarter was 0.8.
Remaining Performance Obligations (RPO) in the first quarter
ended at $23.2 billion, a decrease of $0.2 billion from the fourth
quarter of 2020. Equipment RPO was $7.5 billion, down 6%
sequentially. Services RPO was $15.7 billion, up 2%
sequentially.
Consolidated Revenue by Reporting
Segment
(in millions)
Three Months Ended
Variance
Consolidated segment revenue
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Oilfield Services
$
2,200
$
2,282
$
3,139
(4)
%
(30)
%
Oilfield Equipment
628
712
712
(12)
%
(12)
%
Turbomachinery & Process Solutions
1,485
1,946
1,085
(24)
%
37
%
Digital Solutions
470
556
489
(15)
%
(4)
%
Total
$
4,782
$
5,495
$
5,425
(13)
%
(12)
%
Revenue for the quarter was $4,782 million, a decrease of 13%,
sequentially. The decrease in revenue was driven by lower volume
across all segments.
Compared to the same quarter last year, revenue was down 12%,
driven by lower volume across the Oilfield Services, Oilfield
Equipment, and Digital Solutions segments, partially offset by
Turbomachinery & Process Solutions.
Consolidated Operating Income by
Reporting Segment
(in millions)
Three Months Ended
Variance
Segment operating income
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Oilfield Services
$
143
$
142
$
206
1
%
(31)
%
Oilfield Equipment
4
23
(8)
(82)
%
F
Turbomachinery & Process Solutions
207
332
134
(38)
%
55
%
Digital Solutions
24
76
29
(68)
%
(17)
%
Total segment operating income
379
573
361
(34)
%
5
%
Corporate
(109)
(111)
(122)
2
%
11
%
Goodwill impairment
—
—
(14,773)
—
%
F
Inventory impairment
—
(27)
(160)
F
F
Restructuring, impairment & other
(80)
(229)
(1,325)
65
%
94
%
Separation related
(27)
(24)
(41)
(12)
%
33
%
Operating income (loss)
164
182
(16,059)
(10)
%
F
Adjusted operating income*
270
462
$
240
(42)
%
13
%
Depreciation & amortization
292
307
355
(5)
%
(18)
%
Adjusted EBITDA*
$
562
$
770
$
594
(27)
%
(5)
%
*Non-GAAP measure.
"F" is used in most instances when variance is above 100%.
Additionally, "U" is used in most instances when variance is below
(100)%.
On a GAAP basis, operating income for the first quarter of 2021
was $164 million. Operating income decreased $18 million
sequentially and increased $16,223 million year-over-year. Total
segment operating income was $379 million for the first quarter of
2021, down 34% sequentially and up 5% year-over-year.
Adjusted operating income (a non-GAAP measure) for the first
quarter of 2021 was $270 million, which excludes adjustments
totaling $106 million before tax, mainly related to restructuring
and separation related charges. A complete list of the adjusting
items and associated reconciliation from GAAP has been provided in
Table 1a in the section entitled “Reconciliation of GAAP to
non-GAAP Financial Measures.” Adjusted operating income for the
first quarter was down 42% sequentially, driven by declines in the
Oilfield Equipment, Digital Solutions, and Turbomachinery &
Process Solutions segments which were primarily seasonal, offset by
margin expansion in Oilfield Services. Adjusted operating income
was up 13% year-over-year driven by volume in the Turbomachinery
& Process Solutions segment, and margin expansion in the
Oilfield Equipment segment, partially offset by lower volume in the
Oilfield Services and Digital Solutions segments.
Depreciation and amortization for the first quarter of 2021 was
$292 million.
Adjusted EBITDA (a non-GAAP measure) for the first quarter of
2021 was $562 million, which excludes adjustments totaling $106
million before tax, mainly related to restructuring and separation
related charges. Adjusted EBITDA for the first quarter was down 27%
sequentially and down 5% year-over-year.
Corporate costs were $109 million in the first quarter of 2021,
down 2% sequentially and down 11% year-over-year.
Other Financial Items
Income tax expense in the first quarter of 2021 was $69
million.
Other non-operating loss in the first quarter of 2021 was $626
million. Included in other non-operating loss was a $788 million
loss from the change in fair value of the investment in C3.ai,
partially offset by the reversal of current accruals of $121
million due to the settlement of certain legal matters.
GAAP diluted loss per share was $(0.61). Adjusted diluted
earnings per share was $0.12. Excluded from adjusted diluted
earnings per share were all items listed in Table 1a in the section
entitled "Reconciliation of GAAP to non-GAAP Financial Measures" as
well as the "other adjustments (non-operating)" found in Table
1c.
Cash flow from operating activities was $678 million for the
first quarter of 2021. Free cash flow (a non-GAAP measure) for the
quarter was $498 million. A reconciliation from GAAP has been
provided in Table 1d in the section entitled "Reconciliation of
GAAP to non-GAAP Financial Measures."
Capital expenditures, net of proceeds from disposal of assets,
were $180 million for the first quarter of 2021.
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
(in millions)
Three Months Ended
Variance
Oilfield Services
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Revenue
$
2,200
$
2,282
$
3,139
(4)
%
(30)
%
Operating income
$
143
$
142
$
206
1
%
(31)
%
Operating income margin
6.5
%
6.2
%
6.6
%
0.3
pts
(0.1)
pts
Depreciation & amortization
$
201
$
211
$
249
(5)
%
(20)
%
EBITDA*
$
344
$
353
$
456
(3)
%
(25)
%
EBITDA margin*
15.6
%
15.5
%
14.5
%
0.2
pts
1.1
pts
Oilfield Services (OFS) revenue of $2,200 million for the first
quarter decreased by $82 million, or 4%, sequentially.
North America revenue was $625 million, up 1% sequentially.
International revenue was $1,575 million, a decrease of 5%
sequentially, driven by lower revenues in Russia CIS, the Middle
East, and Europe, partially offset by Latin America.
Segment operating income before tax for the quarter was $143
million. Operating income for the first quarter was up $2 million,
or 1% sequentially, primarily driven by productivity as a result of
cost efficiencies and restructuring, partially offset by lower
volume.
Oilfield Equipment
(in millions)
Three Months Ended
Variance
Oilfield Equipment
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Orders
$
345
$
561
$
492
(39)
%
(30)
%
Revenue
$
628
$
712
$
712
(12)
%
(12)
%
Operating income (loss)
$
4
$
23
$
(8)
(82)
%
F
Operating income margin
0.7
%
3.2
%
(1.1)
%
(2.6)
pts
1.8
pts
Depreciation & amortization
$
32
$
33
$
44
(2)
%
(27)
%
EBITDA*
$
37
$
56
$
36
(35)
%
1
%
EBITDA margin*
5.8
%
7.9
%
5.1
%
(2.0)
pts
0.7
pts
Oilfield Equipment (OFE) orders were down $147 million, or 30%,
year-over-year, driven by lower order intake across most of the
segment. Equipment orders were down 25% and services orders were
down 35% year-over-year.
*Non-GAAP measure.
OFE revenue of $628 million for the quarter decreased $84
million year-over-year. The decrease was driven by lower volume in
the Subsea Services and the Subsea Drilling Systems businesses, and
from the disposition of the Surface Pressure Control flow business
in the fourth quarter of 2020, offset by higher volume in the
Subsea Production Systems and the Flexible Pipe Systems
businesses.
Segment operating income before tax for the quarter was $4
million, an increase of $12 million year-over-year. The increase
was driven by higher cost productivity.
Turbomachinery & Process
Solutions
(in millions)
Three Months Ended
Variance
Turbomachinery & Process
Solutions
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Orders
$
1,447
$
1,832
$
1,394
(21)
%
4
%
Revenue
$
1,485
$
1,946
$
1,085
(24)
%
37
%
Operating income
$
207
$
332
$
134
(38)
%
55
%
Operating income margin
13.9
%
17.1
%
12.3
%
(3.1)
pts
1.6
pts
Depreciation & amortization
$
30
$
31
$
28
(1)
%
10
%
EBITDA*
$
237
$
362
$
161
(35)
%
47
%
EBITDA margin*
16.0
%
18.6
%
14.9
%
(2.7)
pts
1.1
pts
Turbomachinery & Process Solutions (TPS) orders were up 4%
year-over-year. Equipment orders were up 28% and service orders
were down 9%.
TPS revenue of $1,485 million for the quarter increased $400
million, or 37%, year-over-year. The increase was driven by higher
equipment volume. Equipment revenue in the quarter represented 47%
of total segment revenue, and service revenue represented 53% of
total segment revenue.
Segment operating income before tax for the quarter was $207
million, up $73 million, or 55%, year-over-year. The increase was
driven by higher volume and cost productivity, offset partially by
higher equipment mix.
Digital Solutions
(in millions)
Three Months Ended
Variance
Digital Solutions
March 31, 2021
December 31, 2020
March 31, 2020
Sequential
Year-over- year
Orders
$
549
$
528
$
500
4
%
10
%
Revenue
$
470
$
556
$
489
(15)
%
(4)
%
Operating income
$
24
$
76
$
29
(68)
%
(17)
%
Operating income margin
5.2
%
13.8
%
6.0
%
(8.6)
pts
(0.8)
pts
Depreciation & amortization
$
21
$
25
$
25
(14)
%
(16)
%
EBITDA*
$
46
$
101
$
55
(55)
%
(16)
%
EBITDA margin*
9.7
%
18.2
%
11.2
%
(8.5)
pts
(1.5)
pts
*Non-GAAP measure.
Digital Solutions (DS) orders were up 10% year-over-year, driven
by higher order intake in the Waygate Technologies, Process &
Pipeline Services, and Panametrics businesses.
DS revenue of $470 million for the quarter decreased 4%
year-over-year, primarily driven by lower volume across the Nexus
Controls, Process & Pipeline Services, and Waygate Technologies
businesses.
Segment operating income before tax for the quarter was $24
million, down 17% year-over-year. The decrease year-over-year was
primarily driven by lower volume.
Reconciliation of GAAP
to non-GAAP Financial Measures
Management provides non-GAAP financial measures because it
believes such measures are widely accepted financial indicators
used by investors and analysts to analyze and compare companies on
the basis of operating performance and liquidity, and that these
measures may be used by investors to make informed investment
decisions.
Table 1a. Reconciliation of GAAP and
Adjusted Operating Income/(Loss)
Three Months Ended
(in millions)
March 31, 2021
December 31, 2020
March 31, 2020
Operating income (loss) (GAAP)
$
164
$
182
$
(16,059)
Separation related
27
24
41
Goodwill impairment
—
—
14,773
Restructuring, impairment & other
80
229
1,325
Inventory impairment
—
27
160
Total operating income adjustments
106
281
16,299
Adjusted operating income (non-GAAP)
$
270
$
462
$
240
Table 1a reconciles operating income (loss), which is the
directly comparable financial result determined in accordance with
Generally Accepted Accounting Principles (GAAP), to adjusted
operating income (a non-GAAP financial measure). Adjusted operating
income excludes the impact of certain identified items.
Table 1b. Reconciliation of Operating
Income (Loss) to EBITDA and Adjusted EBITDA
Three Months Ended
(in millions)
March 31, 2021
December 31, 2020
March 31, 2020
Operating income (loss) (GAAP)
$
164
$
182
$
(16,059)
Depreciation & amortization
292
307
355
EBITDA (non-GAAP)
456
489
(15,705)
Total operating income adjustments (1)
106
281
16,299
Adjusted EBITDA (non-GAAP)
$
562
$
770
$
594
(1)
See Table 1a for the identified
adjustments to operating income.
Table 1b reconciles operating income (loss), which is the
directly comparable financial result determined in accordance with
GAAP, to EBITDA (a non-GAAP financial measure). Adjusted EBITDA (a
non-GAAP financial measure) excludes the impact of certain
identified items.
Table 1c. Reconciliation of Net Income
(Loss) Attributable to Baker Hughes to Adjusted Net Income (Loss)
Attributable to Baker Hughes
Three Months Ended
(in millions, except per share
amounts)
March 31, 2021
December 31, 2020
March 31, 2020
Net income (loss) attributable to Baker
Hughes (GAAP)
$
(452)
$
653
$
(10,227)
Total operating income adjustments (1)
106
281
16,299
Other adjustments (non-operating) (2)
663
(1,412)
—
Tax on total adjustments (3)
(33)
114
(84)
Total adjustments, net of income tax
736
(1,017)
16,215
Less: adjustments attributable to
noncontrolling interests
193
(314)
5,918
Adjustments attributable to Baker
Hughes
543
(703)
10,297
Adjusted net income (loss) attributable to
Baker Hughes (non-GAAP)
$
91
$
(50)
$
70
Denominator:
Weighted-average shares of Class A common
stock outstanding diluted
746
713
654
Adjusted earnings (loss) per Class A
share— diluted (non-GAAP)
$
0.12
$
(0.07)
$
0.11
(1)
See Table 1a for the identified
adjustments to operating income.
(2)
1Q'21 primarily related to the
unrealized loss on our investment in C3.ai, partially offset by the
reversal of current accruals due to the settlement of certain legal
matters. 4Q'20 primarily related to the unrealized gain on our
investment in C3.ai.
(3)
4Q'20 includes tax expense
related to a business disposition.
Table 1c reconciles net income (loss) attributable to Baker
Hughes, which is the directly comparable financial result
determined in accordance with GAAP, to adjusted net income
attributable to Baker Hughes (a non-GAAP financial measure).
Adjusted net income attributable to Baker Hughes excludes the
impact of certain identified items.
Table 1d. Reconciliation of Cash Flow
From Operating Activities to Free Cash Flow
Three Months Ended
(in millions)
March 31, 2021
December 31, 2020
March 31, 2020
Cash flow from operating activities
(GAAP)
$
678
$
378
$
478
Add: cash used in capital expenditures,
net of proceeds from disposal of assets
(180)
(127)
(325)
Free cash flow (non-GAAP)
$
498
$
250
$
152
Table 1d reconciles net cash flows from operating activities,
which is the directly comparable financial result determined in
accordance with GAAP, to free cash flow (a non-GAAP financial
measure). Free cash flow is defined as net cash flows from
operating activities less expenditures for capital assets plus
proceeds from disposal of assets.
Financial Tables
(GAAP)
Condensed Consolidated
Statements of Income (Loss)
(Unaudited)
Three months ended March
31,
(In millions, except per share
amounts)
2021
2020
Revenue
$
4,782
$
5,425
Costs and expenses:
Cost of revenue
3,924
4,670
Selling, general and administrative
587
675
Goodwill impairment
—
14,773
Restructuring, impairment and other
80
1,325
Separation related
27
41
Total costs and expenses
4,618
21,484
Operating income (loss)
164
(16,059)
Other non-operating income (loss), net
(626)
25
Interest expense, net
(74)
(59)
Loss before income taxes
(536)
(16,093)
Provision for income taxes
(69)
(5)
Net loss
(605)
(16,098)
Less: Net loss attributable to
noncontrolling interests
(153)
(5,871)
Net loss attributable to Baker Hughes
Company
$
(452)
$
(10,227)
Per share amounts:
Basic and diluted loss per Class A common
stock
$
(0.61)
$
(15.66)
Weighted average shares:
Class A basic & diluted
740
653
Cash dividend per Class A common stock
$
0.18
$
0.18
Condensed Consolidated
Statements of Financial Position
(Unaudited)
(In millions)
March 31, 2021
December 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents
$
4,382
$
4,132
Current receivables, net
5,263
5,622
Inventories, net
4,181
4,421
All other current assets
1,960
2,280
Total current assets
15,786
16,455
Property, plant and equipment, less
accumulated depreciation
5,163
5,358
Goodwill
5,969
5,977
Other intangible assets, net
4,228
4,397
Contract and other deferred assets
1,899
2,001
All other assets
3,791
3,819
Total assets
$
36,836
$
38,007
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$
3,468
$
3,532
Short-term debt and current portion of
long-term debt
887
889
Progress collections and deferred
income
3,397
3,454
All other current liabilities
2,206
2,352
Total current liabilities
9,958
10,227
Long-term debt
6,733
6,744
Liabilities for pensions and other
employee benefits
1,197
1,217
All other liabilities
1,524
1,577
Equity
17,424
18,242
Total liabilities and equity
$
36,836
$
38,007
Outstanding Baker Hughes Company
shares:
Class A common stock
773
724
Class B common stock
268
311
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Three Months Ended March
31,
(In millions)
2021
2020
Cash flows from operating activities:
Net loss
$
(605)
$
(16,098)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization
292
355
Goodwill impairment
—
14,773
Other asset impairments
—
1,103
Unrealized loss on equity security
788
—
Working capital
405
183
Other operating items, net
(202)
162
Net cash flows from operating
activities
678
478
Cash flows from investing activities:
Expenditures for capital assets, net of
proceeds from disposal of assets
(180)
(325)
Other investing items, net
6
7
Net cash flows used in investing
activities
(174)
(318)
Cash flows from financing activities:
Net repayments of debt and other
borrowings
(36)
(115)
Dividends paid
(131)
(118)
Distributions to GE
(56)
(68)
Other financing items, net
(32)
(26)
Net cash flows used in financing
activities
(255)
(327)
Effect of currency exchange rate changes
on cash and cash equivalents
1
(72)
Increase (decrease) in cash and cash
equivalents
250
(239)
Cash and cash equivalents, beginning of
period
4,132
3,249
Cash and cash equivalents, end of
period
$
4,382
$
3,010
Supplemental cash flows disclosures:
Income taxes paid, net of refunds
$
39
$
118
Interest paid
$
51
$
49
Supplemental Financial Information
Supplemental financial information can be found on the Company’s
website at: investors.bakerhughes.com in the Financial Information
section under Quarterly Results.
Conference Call and Webcast
The Company has scheduled an investor conference call to discuss
management’s outlook and the results reported in today’s earnings
announcement. The call will begin at 8:00 a.m. Eastern time, 7:00
a.m. Central time on Wednesday, April 21, 2021, the content of
which is not part of this earnings release. The conference call
will be broadcast live via a webcast and can be accessed by
visiting the Events and Presentations page on the Company’s website
at: investors.bakerhughes.com. An archived version of the webcast
will be available on the website for one month following the
webcast.
Forward-Looking Statements
This news release (and oral statements made regarding the
subjects of this release) may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, (each a “forward-looking statement”). The words
“anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,”
“estimate,” “project,” “foresee,” “forecasts,” “predict,”
“outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,”
“may,” “probable,” “likely,” and similar expressions, and the
negative thereof, are intended to identify forward-looking
statements. There are many risks and uncertainties that could cause
actual results to differ materially from our forward-looking
statements. These forward-looking statements are also affected by
the risk factors described in the Company’s annual report on Form
10-K for the annual period ended December 31, 2020 and those set
forth from time to time in other filings with the Securities and
Exchange Commission (“SEC”). The documents are available through
the Company’s website at: investors.bakerhughes.com or through the
SEC’s Electronic Data Gathering and Analysis Retrieval (“EDGAR”)
system at: www.sec.gov. We undertake no obligation to publicly
update or revise any forward-looking statement.
Our expectations regarding our business outlook and business
plans; the business plans of our customers; oil and natural gas
market conditions; cost and availability of resources; economic,
legal and regulatory conditions, and other matters are only our
forecasts regarding these matters.
These forward-looking statements, including forecasts, may be
substantially different from actual results, which are affected by
many risks, along with the following risk factors and the timing of
any of these risk factors:
Restructuring - Our restructuring plans may not be successful
and achieve the expected result; continued deterioration of market
conditions, whether due to the continued spread of COVID-19 or
other events could result in further restructuring costs and
impairments.
COVID-19 - The continued spread of the COVID-19 virus and the
continuation of the measures to try to contain the virus, such as
travel bans and restrictions, quarantines, shelter in place orders,
and shutdowns, and the related uncertainties.
GE Separation - The failure to successfully eliminate
dependencies on GE or a failure by GE to supply products and
services to us in accordance with applicable contractual terms
could have a material effect on our business.
Economic and political conditions - the impact of worldwide
economic conditions; the effect that declines in credit
availability may have on worldwide economic growth and demand for
hydrocarbons; foreign currency exchange fluctuations and changes in
the capital markets in locations where we operate; and the impact
of government disruptions and sanctions.
Orders and RPO - our ability to execute on orders and RPO in
accordance with agreed specifications, terms and conditions and
convert those orders and RPO to revenue and cash.
Oil and gas market conditions - the level of petroleum industry
exploration, development and production expenditures; the price of,
volatility in pricing of, and the demand for crude oil and natural
gas; drilling activity; drilling permits for and regulation of the
shelf and the deepwater drilling; excess productive capacity; crude
and product inventories; liquefied natural gas supply and demand;
seasonal and other adverse weather conditions that affect the
demand for energy; severe weather conditions, such as tornadoes and
hurricanes, that affect exploration and production activities;
Organization of Petroleum Exporting Countries (“OPEC”) policy and
the adherence by OPEC nations to their OPEC production quotas.
Terrorism and geopolitical risks - war, military action,
terrorist activities or extended periods of international conflict,
particularly involving any petroleum-producing or -consuming
regions; labor disruptions, civil unrest or security conditions
where we operate; potentially burdensome taxation, expropriation of
assets by governmental action; cybersecurity risks and cyber
incidents or attacks; epidemic outbreaks.
About Baker Hughes:
Baker Hughes (NYSE: BKR) is an energy technology company that
provides solutions for energy and industrial customers worldwide.
Built on a century of experience and with operations in over 120
countries, our innovative technologies and services are taking
energy forward - making it safer, cleaner and more efficient for
people and the planet. Visit us at bakerhughes.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210421005282/en/
Investor Relations
Jud Bailey +1 281-809-9088
investor.relations@bakerhughes.com
Media Relations
Thomas Millas +1 713-879-2862 thomas.millas@bakerhughes.com
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