- Orders of $6.6 billion for the quarter, up 15% sequentially and
up 9% year-over-year
- Revenue of $6.0 billion for the quarter, up 7% sequentially and
up 8% year-over-year
- GAAP operating income of $271 million for the quarter,
increased 54% sequentially and increased more than three times
year-over-year
- Adjusted operating income (a non-GAAP measure) of $361 million
for the quarter, up 32% sequentially and up 25%
year-over-year*
- GAAP diluted earnings per share of $(0.02) for the quarter
which included $0.22 per share of adjusting items. Adjusted diluted
earnings per share (a non-GAAP measure) were $0.20*
- Cash flows generated from operating activities were $593
million for the quarter. Free cash flow (a non-GAAP measure) for
the quarter was $355 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 Tables 1a, 1b and 1c for a reconciliation of GAAP to non-GAAP
financial measures.
Baker Hughes, a GE company (NYSE: BHGE) ("BHGE" or the
"Company") announced results today for the second quarter of
2019.
Three Months Ended
Variance
(in millions except per share amounts)
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Orders
$
6,554
$
5,693
$
6,036
15%
9%
Revenue
5,994
5,615
5,548
7%
8%
Operating income
271
176
78
54%
F
Adjusted operating income (non-GAAP)*
361
273
289
32%
25%
Net income (loss) attributable to BHGE
(9
)
32
(19
)
U
52%
Adjusted net income (non-GAAP)
attributable to BHGE*
104
76
41
37%
F
EPS attributable to Class A
shareholders
(0.02
)
0.06
(0.05
)
U
62%
Adjusted EPS (non-GAAP) attributable to
Class A shareholders*
0.20
0.15
0.10
37%
F
Cash flow from operating activities
593
(184
)
139
F
F
Free cash flow (non-GAAP)*
355
(419
)
(22
)
F
F
*These are non-GAAP financial measures.
See section entitled "Charges and Credits" for a reconciliation
from GAAP.
"F" is used in most instances when
variance is above 100%. Additionally, "U" is used in most instances
when variance is below (100)%.
“We delivered a solid second quarter 2019 both commercially and
operationally. The trends for our longer-cycle businesses remain
intact. The Liquefied Natural Gas (LNG) new-build cycle is a strong
positive for our company and our international Oilfield Services
(OFS) business continues to be very successful. Our outlook for
2019 is unchanged and we remain focused on our priorities of
gaining share, improving margins and delivering strong cash flows,”
said Lorenzo Simonelli, BHGE Chairman and Chief Executive
Officer.
“In the second quarter, we booked $6.6 billion in orders, driven
by year-over-year growth in three of our four segments. We
delivered $6.0 billion in revenue and adjusted operating income in
the quarter was $361 million.
“In Oilfield Services (OFS), we executed on our strategy to grow
in key international markets, while in North America our
production-levered portfolio is driving growth amid uncertain
market conditions. We executed well on previously-announced wins,
helping our customers achieve step-changes in efficiency on some of
their most important projects.
“In Oilfield Equipment (OFE), we continue to enhance our
offerings through Subsea Connect, and we are focused on technology,
lowering project costs and delivering for customers. Flexible Pipe
System orders were up significantly in the quarter compared to the
lows of 2018, a good sign for future revenue growth.
“In Turbomachinery & Process Solutions (TPS), the second
quarter saw the acceleration of activity in the LNG market. We have
seen approximately 60 Million Tons Per Annum (MTPA) of new capacity
reach Final Investment Decision (FID) since the fourth quarter of
2018, and the industry is on track to reach the 100 MTPA we
outlined by the end of 2019. Also in the quarter, we delivered
strong orders in our on- and offshore production segment, securing
important wins in India and Africa. We remain well positioned
across multiple market segments, most importantly LNG, as more
projects move towards positive FID this year.
“In Digital Solutions (DS), we achieved a major milestone in the
quarter to strategically position our digital software business. We
announced a joint venture with C3.ai, the premier company in the
industrial Artificial Intelligence (AI) space. The partnership will
help us deliver AI that is faster, easier, and more scalable to
drive outcomes for our customers. By integrating our strong digital
capabilities and oil and gas industry expertise with C3’s unique AI
solutions, we will accelerate the overall digital transformation of
this industry.
“In closing, we executed well in the second quarter, and we are
encouraged by strengthening international markets and the strong
LNG project pipeline. Going forward, we remain focused on our
financial priorities and differentiating ourselves to drive higher
returns across our portfolio,” concluded Simonelli.
Quarter Highlights
Customer Wins
BHGE’s OFS segment secured new wins and expanded its scope
across existing contracts in the quarter as a result of strong
performance. In Norway, the Company was awarded two long-term
contracts for downhole monitoring and sand control screens,
expanding on an integrated contract award it secured in 2018 with
the same customer. In the United Arab Emirates (UAE), BHGE was
awarded a long-term contract to supply upper completions and well
monitoring for 94 wells.
BHGE’s OFS team also won a multi-year, sole-provider contract
for artificial lift in the Gulf of Mexico. This win expands BHGE’s
position as the only electrical submersible pump (ESP) supplier
working for Integrated Oil Companies (IOC) offshore Mexico.
Separately in Malaysia, BHGE secured an integrated well services
contract for 22 wells with a large IOC customer, displacing the
incumbent. The same customer awarded BHGE a lower completions
contract to deploy its new GeoFORM™ sand control technology in the
country for the first time.
In North America, BHGE’s OFS segment won a multi-year contract
to provide artificial lift solutions to a customer in the Bakken.
BHGE’s long-term relationship with the customer and track-record of
performance in the basin led to this important win. In Canada, BHGE
extended a large production chemicals contract with a long-term
customer. Over the past 10 years, BHGE’s industry-leading
treatments have helped the operator reduce chemicals cost by 70%
per barrel of oil produced, while production has grown 500%.
In the Company’s OFE business, BHGE gained traction in its
Flexible Pipe Systems product line in the quarter. It secured
orders to provide full gas injection, production, water injection
and gas lift packages for various pre-salt and post-salt fields in
Latin America. Also in the quarter, BHGE secured awards to provide
flexible pipe systems for important projects in the Middle East and
Asia Pacific regions.
BHGE’s TPS business won an important contract to provide
compression and power generation equipment for the development of
an important project in southeast Algeria. The reliability and
availability of a power supply in a remote area with no grid
connection was fundamental to the operator, and BHGE’s proven track
record and strong local presence in Algeria were important factors
that helped BHGE secure the award.
TPS was also awarded an order to supply a gas turbine-driven
generator package for a Floating Production Storage and Offloading
system (FPSO) offshore India. BHGE will provide three of its
LM2500+ G4 gas turbines to produce over 50 megawatts of power for
the FPSO’s operations. These gas turbines have a proven track
record in offshore operations, with high reliability and
availability, and were optimized to meet the reduced footprint
requirements, an important factor in FPSO applications. The
turbines also provide enhanced combustion to reduce NOx emissions
in support of the customer's low carbon clean-environment
efforts.
Technology & Innovation
During the quarter, BHGE’s OFS team successfully deployed its
SureCONNECT intelligent downhole system for a large operator in the
North Sea. The system enables connection of the upper completion
components to the lower completion with hydraulic, electric, or
fiber-optic conduits. For the first time, operators can achieve
real-time fiber-optic monitoring across the entire wellbore, for
the life of the well-enabling them to make data-driven decisions to
optimize reservoir performance and proactively mitigate risks such
as equipment failures.
The Navi-Drill™ DuraMax™ drilling motor is the latest generation
of high-performance positive displacement motors from BHGE. This
new motor leverages state-of-the-art research and modeling
techniques to deliver the most reliable, efficient and
power-optimized motor in the market today. For unconventional
applications, the motor provides increased horsepower, torque and
durability to drill the curve and lateral in one run and drill
extended laterals, saving drilling time and cost for customers. The
motor is providing improved efficiency and effectiveness, drilling
wells faster and improving well construction productivity for
customers across North America.
BHGE recently launched its GeoFORM™ conformable sand management
system, which leverages advanced material science to deliver a new
approach to sand control- one that expands and conforms to complex
well profiles, delivering a new level of sand-control performance
with fewer operational requirements.
In the quarter, BHGE’s OFE business officially opened its Subsea
Center of Excellence (CoE) in Montrose, Scotland. This world-class
COE will deliver engineering, manufacturing, testing and services
to advance deepwater technology for customers. Repurposing this
campus is an important milestone for BHGE globally, enabling
complete solutions-from design to delivery-from one location
servicing customers globally. The COE is also home to the Aptara™
design center, dedicated to the development of the Aptara
Totex-lite subsea system. The Aptara suite of products is a
cornerstone of the Company's Subsea Connect approach, featuring a
range of lightweight, modular technology solutions re-engineered to
cut total cost of ownership in half.
OFE also signed a memorandum of understanding with Saudi Aramco
to create a new facility in the Kingdom of Saudi Arabia to
manufacture non-metallic materials. BHGE will leverage composites
and technologies to accelerate non-metallics adoption in the energy
industry. The partnership to develop non-metallic products will
benefit a wide range of industries and support further innovation
and manufacturing in Saudi Arabia.
In DS, BHGE announced the joint venture with C3.ai, whose AI
platform is quickly becoming the enterprise standard across a broad
range of industries. Using this technology as well as BHGE’s oil
and gas domain knowledge and existing digital suite, the companies
will deliver C3’s technology to oil and gas customers and
collaborate on new AI applications specific for oil and gas
outcomes. BHGE will also offer the combined strength of oil and gas
and AI expertise directly to customers, deploying teams of data
scientists and oilfield experts into customer environments to best
leverage the C3 portfolio and deliver AI solutions that meet
specific customer needs.
Executing for Customers
The strategic partnership between BHGE and ADNOC Drilling has
delivered strong performance since launching operations in January
of this year. The teams have mobilized four rigs and drilled more
than 100,000 feet with 97% drilling efficiency. On the first eight
wells, ADNOC Drilling saved more than 88 days of drilling time.
BHGE will continue to work closely with ADNOC Drilling to support
ADNOC’s 2030 Smart Growth strategy.
BHGE has delivered substantial progress as part of its
integrated well services contract for Equinor. In the first half of
2019, BHGE fully integrated eight drilling units in addition to the
two existing units. The Company also drilled more than 100 thousand
meters with “best-in-class” performance. BHGE utilized a remote
operations model for part of the project, leveraging automation to
improve efficiency, standardize processes and improve safety.
In the second quarter, BHGE’s TPS business achieved an important
milestone for the Tengizchevroil project, the completion and
shipment of the fifth and final power generation module that will
generate 130MW of power for the project. Each module is equipped
with a Frame 9 gas turbine and is built to operate in extreme
conditions. Leveraging BHGE’s modular, plug and play approach
enables lower installation costs and minimized risks during start
up at the customer site.
Consolidated Results by Reporting
Segment*
Consolidated Orders by Reporting
Segment
(in millions)
Three Months Ended
Variance
Consolidated segment orders
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Oilfield Services
$
3,266
$
2,997
$
2,866
9
%
14
%
Oilfield Equipment
617
766
1,035
(19
)%
(40
)%
Turbomachinery & Process Solutions
1,983
1,271
1,498
56
%
32
%
Digital Solutions
688
659
637
4
%
8
%
Total
$
6,554
$
5,693
$
6,036
15
%
9
%
Orders for the quarter were $6,554 million, up 15% sequentially
and up 9% year-over-year. The sequential increase was driven
primarily by strong order intake in Turbomachinery and Process
Solutions and Oilfield Services.
Year-over-year, the strong orders growth was driven by
Turbomachinery and Process Solutions, Oilfield Services, and
Digital Solutions, partially offset by a decline in Oilfield
Equipment orders. Year-over-year equipment orders were up 10% and
service orders were up 7%.
The Company's total book-to-bill ratio in the quarter was 1.1;
the equipment book-to-bill ratio in the quarter was 1.2.
Remaining Performance Obligations (RPO) in the second quarter
ended at $20.6 billion, an increase of $0.1 billion from the first
quarter of 2019. Equipment RPO was $5.6 billion, up 2%
sequentially. Services RPO was $15.0 billion, flat
sequentially.
Consolidated Revenue by Reporting Segment
(in millions)
Three Months Ended
Variance
Consolidated segment revenue
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Oilfield Services
$
3,263
$
2,986
$
2,884
9
%
13
%
Oilfield Equipment
693
735
617
(6
)%
12
%
Turbomachinery & Process Solutions
1,405
1,302
1,385
8
%
1
%
Digital Solutions
632
592
662
7
%
(5
)%
Total
$
5,994
$
5,615
$
5,548
7
%
8
%
Revenue for the quarter was $5,994 million, an increase of 7%,
sequentially. The sequential growth was driven by higher volume
across most segments. Oilfield Services was up 9%, Turbomachinery
and Process Solutions was up 8%, and Digital Solutions was up 7%,
partially offset by Oilfield Equipment down 6%.
Compared to the same quarter last year, revenue was up 8%.
Oilfield Services was up 13%, Oilfield Equipment was up 12%,
Turbomachinery & Process Solutions was up 1%, partially offset
by Digital Solutions down 5%.
Consolidated Operating Income (Loss) by Reporting
Segment
(in millions)
Three Months Ended
Variance
Segment operating income (loss)
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Oilfield Services
$
233
$
176
$
189
32
%
23
%
Oilfield Equipment
14
12
(12
)
22
%
F
Turbomachinery & Process Solutions
135
118
113
14
%
19
%
Digital Solutions
84
68
96
23
%
(13
)%
Total segment operating income
466
373
387
25
%
20
%
Corporate
(105
)
(100
)
(98
)
(4
)%
(7
)%
Inventory impairment
—
—
(15
)
—
100
%
Restructuring, impairment & other
charges
(50
)
(62
)
(146
)
22
%
67
%
Separation and merger related costs
(40
)
(34
)
(50
)
(20
)%
19
%
Operating income
271
176
78
54
%
F
Adjusted operating income**
$
361
$
273
$
289
32
%
25
%
**Non-GAAP measure (see Table 1a in the
section entitled “Charges and Credits” for a reconciliation from
GAAP).
"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 second quarter of 2019
was $271 million. Operating income increased $95 million
sequentially and increased $193 million year-over-year. Total
segment operating income was $466 million for the second quarter of
2019, up 25% sequentially and up 20% year-over-year.
Adjusted operating income (a non-GAAP measure) for the second
quarter of 2019 was $361 million, which excludes adjustments
totaling $90 million before tax, mainly related to restructuring
charges and separation and merger related costs. A complete list of
the adjusting items and associated reconciliation from GAAP has
been provided in Table 1a in the section entitled “Charges and
Credits.” Adjusted operating income for the second quarter was up
32% sequentially and up 25% year-over-year driven by increased
volume and productivity.
Depreciation and amortization for the second quarter of 2019 was
$360 million.
Corporate costs were $105 million in the second quarter of 2019,
up 4% sequentially and up 7% year-over-year.
Other Financial Items
Income tax expense in the second quarter of 2019 was $95
million.
Included in other non-operating expense is a $145 million charge
in the second quarter of 2019 primarily related to the expected
sale of a non-core business within our Turbomachinery and Process
Solutions segment.
GAAP diluted earnings per share were $(0.02). Adjusted diluted
earnings per share were $0.20. Excluded from adjusted diluted
earnings per share were all items listed in Table 1a in the section
entitled "Charges and Credits" as well as the "other adjustments
(non-operating)" found in Table 1b.
Cash flows from operating activities were $593 million for the
second quarter of 2019. Free cash flow (a non-GAAP measure) for the
quarter was $355 million. A reconciliation from GAAP has been
provided in Table 1c in the section entitled "Charges and
Credits."
Capital expenditures, net of proceeds from disposal of assets,
were $238 million for the second quarter of 2019.
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
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Revenue
$
3,263
$
2,986
$
2,884
9
%
13
%
Operating income
$
233
$
176
$
189
32
%
23
%
Operating income margin
7.1
%
5.9
%
6.6
%
1.2pts
0.6pts
Oilfield Services (OFS) revenue of $3,263 million for the second
quarter increased by $277 million, or 9%, sequentially.
North America revenue was $1,218 million, up 5% sequentially.
International revenue was $2,045 million, up 12% sequentially,
driven by increases across all regions with strong growth in the
Middle East, Asia Pacific, and Europe. From a product line
perspective, the sequential increase of 9% in OFS was driven
primarily by Completions, Pressure Pumping, and Drilling and
Completion Fluids.
Segment operating income before tax for the quarter was $233
million, up $57 million, or 32%, sequentially, primarily driven by
higher volume and increased cost productivity.
Oilfield Equipment
(in millions)
Three Months Ended
Variance
Oilfield Equipment
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Orders
$
617
$
766
$
1,035
(19
)%
(40
)%
Revenue
$
693
$
735
$
617
(6
)%
12
%
Operating income (loss)
$
14
$
12
$
(12
)
22
%
F
Operating income (loss) margin
2.0
%
1.6
%
(1.9
)%
0.5pts
3.9pts
Oilfield Equipment (OFE) orders were down $418 million, or 40%,
year-over-year, driven primarily by lower equipment order intake.
Equipment orders were down 58% driven by deal timing in Subsea
Production Systems. Service orders were up 13% primarily driven by
higher order intake in the Flexibles and Surface Pressure Control
businesses.
OFE revenue of $693 million for the quarter increased $77
million, or 12%, year-over-year. The increase was driven by higher
volume in the Subsea Production Systems business, Subsea Services
business, and Subsea Drilling Systems business. These increases
were partially offset by lower volume in the Flexible Pipe
business.
Segment operating income before tax for the quarter was $14
million, up $26 million year-over-year. The increase was driven by
higher volume and better cost productivity.
Turbomachinery & Process Solutions
(in millions)
Three Months Ended
Variance
Turbomachinery & Process
Solutions
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over year
Orders
$
1,983
$
1,271
$
1,498
56
%
32
%
Revenue
$
1,405
$
1,302
$
1,385
8
%
1
%
Operating income
$
135
$
118
$
113
14
%
19
%
Operating income margin
9.6
%
9.1
%
8.2
%
0.5pts
1.4pts
Turbomachinery & Process Solutions (TPS) orders were up 32%
year-over-year. Equipment orders were up 117% driven by higher LNG
and On- and Offshore-production orders. Service orders were down
5%.
TPS revenue of $1,405 million for the quarter increased 1%,
year-over-year. The increase was driven by higher On- and
Offshore-production equipment volume as well as increased revenue
in contractual and transactional services. Equipment revenue in the
quarter represented 35% of total segment revenue, and Service
revenue represented 65% of total segment revenue.
Segment operating income before tax for the quarter was $135
million, up 19% year-over-year. The margin expansion was driven by
increased cost productivity and higher volume, partially offset by
the sale of the natural gas solutions business in October 2018.
Digital Solutions
(in millions)
Three Months Ended
Variance
Digital Solutions
June 30, 2019
March 31, 2019
June 30, 2018
Sequential
Year-over- year
Orders
$
688
$
659
$
637
4
%
8
%
Revenue
$
632
$
592
$
662
7
%
(5
)%
Operating income
$
84
$
68
$
96
23
%
(13
)%
Operating income margin
13.2
%
11.5
%
14.6
%
1.8pts
(1.3)pts
Digital Solutions (DS) orders were up 8% year-over-year, driven
primarily by higher order intake in the Measurement & Sensing
and Controls businesses.
DS revenue of $632 million for the quarter decreased 5%
year-over-year, mainly driven by the lower volume in the Bently and
Software businesses, partially offset by higher volume in the
Measurement & Sensing and Pipeline & Process Solutions
businesses.
Segment operating income before tax for the quarter was $84
million, down 13% year-over-year. The decrease year-over-year was
primarily driven by unfavorable product mix.
*Certain columns and rows may not sum up due to the use of
rounded numbers.
Charges &
Credits*
Table 1a. Reconciliation of GAAP and Adjusted Operating
Income
Three Months Ended
(in millions)
June 30, 2019
March 31, 2019
June 30, 2018
Operating income (GAAP)
$
271
$
176
$
78
Separation, merger & integration
related costs
40
34
50
Restructuring & other
50
62
146
Inventory impairment
—
—
15
Total operating income adjustments
90
97
211
Adjusted operating income (non-GAAP)
$
361
$
273
$
289
Table 1a reconciles operating
income, 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 GAAP and Non-GAAP Net
Income/(Loss)
Three Months Ended
(in millions, except per share
amounts)
June 30, 2019
March 31, 2019
June 30, 2018
Net income (loss) attributable to BHGE
(GAAP)
$
(9
)
$
32
$
(19
)
Total operating income adjustments
(identified items)
90
97
211
Other adjustments (non-operating) (1)
145
—
(37
)
Tax on total adjustments
(7
)
(9
)
(14
)
Total adjustments, net of income tax
227
88
160
Less: adjustments attributable to
noncontrolling interests
114
44
100
Adjustments attributable to BHGE
113
44
60
Adjusted net income attributable to BHGE
(non-GAAP)
$
104
$
76
$
41
Denominator:
Weighted-average shares of Class A common
stock outstanding diluted
515
516
414
Adjusted earnings per Class A share—
diluted (non-GAAP)
$
0.20
$
0.15
$
0.10
(1)
2Q'19: Primarily includes valuation
allowance on business held for sale; 2Q'18: Gain on sale of
business.
Table 1b reconciles net income
attributable to BHGE, which is the directly comparable financial
result determined in accordance with GAAP, to adjusted net income
attributable to BHGE (a non-GAAP financial measure). Adjusted net
income attributable to BHGE excludes the impact of certain
identified items.
Table 1c. Reconciliation of Cash Flow From Operating
Activities to Free Cash Flow
Three Months Ended
(in millions)
June 30, 2019
March 31, 2019
June 30, 2018
Cash flow from (used in) operating
activities (GAAP)
$
593
$
(184
)
$
139
Add: cash used in capital expenditures,
net of proceeds from disposal of assets
(238
)
(235
)
(161
)
Free cash flow (non-GAAP)
$
355
$
(419
)
$
(22
)
Table 1c 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 (used in) operating activities less expenditures for
capital assets plus proceeds from disposal of assets.
Management provides non-GAAP financial
measures in Tables 1a, 1b, and 1c 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.
*Certain columns and rows may not sum up
due to the use of rounded numbers.
Financial Tables (GAAP)
Condensed Consolidated
Statements of Income (Loss)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(In millions, except per share
amounts)
2019
2018
2019
2018
Revenue
$
5,994
$
5,548
$
11,608
$
10,947
Costs and expenses:
Cost of revenue
4,932
4,612
9,571
9,170
Selling, general and administrative
expenses
701
662
1,404
1,336
Restructuring, impairment and other
50
146
112
308
Separation and merger related costs
40
50
74
96
Total costs and expenses
5,723
5,470
11,161
10,910
Operating income
271
78
447
37
Other non operating income (loss), net
(131
)
43
(110
)
45
Interest expense, net
(56
)
(63
)
(115
)
(109
)
Income (loss) before income taxes and
equity in loss of affiliate
84
58
222
(27
)
Equity in loss of affiliate
—
(34
)
—
(54
)
Benefit (provision) for income taxes
(95
)
(62
)
(162
)
24
Net income (loss)
(11
)
(38
)
60
(57
)
Less: Net income (loss) attributable to
noncontrolling interests
(2
)
(19
)
37
(108
)
Net income (loss) attributable to Baker
Hughes, a GE company
$
(9
)
$
(19
)
$
23
$
51
Per share amounts:
Basic and diluted earnings (loss) per
Class A common stock
$
(0.02
)
$
(0.05
)
$
0.04
$
0.12
Weighted average shares:
Class A basic
515
414
515
417
Class A diluted
515
414
516
419
Cash dividend per Class A common share
$
0.18
$
0.18
$
0.36
$
0.36
Condensed Consolidated
Statements of Financial Position
(Unaudited)
(In millions)
June 30, 2019
December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents (1)
$
3,138
$
3,723
Current receivables, net
6,310
5,969
Inventories, net
4,807
4,620
All other current assets
730
659
Total current assets
14,985
14,971
Property, plant and equipment, less
accumulated depreciation
6,130
6,228
Goodwill
20,705
20,717
Other intangible assets, net
5,510
5,719
Contract and other deferred assets
1,849
1,894
All other assets
3,697
2,910
Total assets (1)
$
52,876
$
52,439
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$
3,966
$
4,025
Short-term debt and current portion of
long-term debt (1)
892
942
Progress collections and deferred
income
2,214
1,765
All other current liabilities
2,269
2,288
Total current liabilities
9,341
9,020
Long-term debt
6,256
6,285
Liabilities for pensions and other
employee benefits
997
1,018
All other liabilities
1,501
1,103
Equity
34,781
35,013
Total liabilities and equity
$
52,876
$
52,439
(1)
Total assets include $856 million
and $896 million of assets held on behalf of GE, of which $739
million and $747 million is cash and cash equivalents and $117
million and $149 million is investment securities at June 30, 2019
and December 31, 2018, respectively, and a corresponding amount of
liability is reported in short-term borrowings.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Six Months Ended June
30,
(In millions)
2019
2018
Cash flows from operating activities:
Net income (loss)
$
60
$
(57
)
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation and amortization
709
780
Valuation allowance on disposal group
136
—
Working capital and other operating items,
net
(496
)
(290
)
Net cash flows from operating
activities
409
433
Cash flows from investing activities:
Expenditures for capital assets, net of
proceeds from disposal of assets
(473
)
(230
)
Net cash paid for business interests
(69
)
—
Other investing items, net
(21
)
68
Net cash flows used in investing
activities
(563
)
(162
)
Cash flows from financing activities:
Repayment of long-term debt
(25
)
(648
)
Dividends paid
(185
)
(150
)
Distributions to noncontrolling
interest
(188
)
(253
)
Repurchase of Class A common stock
—
(387
)
Repurchase of common units from GE by BHGE
LLC
—
(638
)
Other financing items, net
(29
)
(296
)
Net cash flows used in financing
activities
(427
)
(2,372
)
Effect of currency exchange rate changes
on cash and cash equivalents
(4
)
(50
)
Decrease in cash and cash equivalents
(585
)
(2,151
)
Cash and cash equivalents, beginning of
period
3,723
7,030
Cash and cash equivalents, end of
period
$
3,138
$
4,879
Supplemental Financial Information
Supplemental financial information can be found on the Company’s
website at: investors.bhge.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 9:30 a.m. Eastern time, 8:30
a.m. Central time on Wednesday, July 31, 2019, the content of which
is not part of this earnings release. A slide presentation
providing summary financial and statistical information that will
be discussed on the call will also be posted to the Company’s
website and available for real-time viewing at investors.bhge.com.
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.bhge.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, 2018; the Company's
subsequent quarterly report on Form 10-Q for the quarterly period
ended March 31, 2019; 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:
www.investors.bhge.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:
Integration and separation activities - the ability to
successfully integrate Baker Hughes with GE Oil & Gas,
including operations, technologies, products and services; and at
the same time, reduce and / or eliminate our dependencies on
GE.
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.
Dependence on GE - any failure by GE to supply products and
services to us in accordance with applicable contractual terms
could have a material effect on our business.
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 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.
Baker Hughes, a GE company (NYSE: BHGE) is the world’s first and
only fullstream provider of integrated oilfield products, services
and digital solutions. We deploy minds and machines to enhance
customer productivity, safety and environmental stewardship, while
minimizing costs and risks at every step of the energy value chain.
With operations in over 120 countries, we infuse over a century of
experience with the spirit of a startup - inventing smarter ways to
bring energy to the world. For more information on Baker Hughes, a
GE company visit: www.bhge.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190731005322/en/
Investor Contact: Philipp Mueller, +1 281 809 9088,
investor.relations@bhge.com
Media Contact: Stephanie Cathcart, +1 202 549 6462,
stephanie.cathcart@bhge.com Melanie Kania, +1 713 439 8303,
melanie.kania@bhge.com
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