Baker Hughes Company · NASDAQ:BKR
Baker Hughes — Investor Presentation (September 2023)
47 slides from Baker Hughes's investor presentation, Sep 6, 2023
Slide 1: Investor Overview September 2023
Copyright 2023 Baker Hughes Company. All rights reserved. The information contained in this document is company confidential and proprietary property of Baker Hughes and its affiliates. It is to be used only for the benefit of Baker Hughes and may not be distributed, transmitted, reproduced, altered
Slide 2: Forward-looking statements
Copyright 2023 Baker Hughes Company. All rights reserved. This presentation (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
Slide 3: Overview & Strategy
Overview & Strategy Copyright 2023 Baker Hughes Company. All rights reserved.3
Slide 4: Baker Hughes key facts
Copyright 2023 Baker Hughes Company. All rights reserved. Note all data as of December 31, 2022 *Number of employees as of June 30, 2023 BAKER HUGHES We take energy forward— making it safer, cleaner, and more efficient for people and the planet ~57,000 Employees* 217 Perfect HSE days in 2022 120+ Co
Slide 5: Baker Hughes Overview
Copyright 2023 Baker Hughes Company. All rights reserved. BAKER HUGHES OVERVIEW Providing equipment & solutions to help solve the world’s greatest energy challenges Production Solutions New Energy & carbon management Gas Technology Industrial Asset Management Well Construction Oilfield optimization
Slide 6: Span of capability provides compelling investment case
Our span of capability across the value chain provides compelling investment case New Energy projects offer increased scope for Baker Hughes Existing customers are evolving, and new customers are emerging Baker Hughes portfolio aligning with customer needs CUSTOMER LANDSCAPE Solving the Energy Trile
Slide 7: Enabling the circular energy economy
Baker Hughes … enabling the circular energy economy 7ENERGY ECOSYSTEM Copyright 2023 Baker Hughes Company. All rights reserved. Power Grid SNG gas sales CO2 Storage Utility terminal Local industry Battery factories Offshore Electrification Ammonia CO2 Utilisation Illustrative interconnected low carb
Slide 8: Well positioned for oil & gas and New Energy growth opportunities
Well positioned for oil & gas and New Energy growth opportunities 8PORTFOLIO VIS ION Irrespective of the adoption, pace and the path of the Energy Transition OFS DS TPS OFE BAKER HUGHES PORTFOLIO VISION IET OFSE IET OFSE NEW ENERGY IET OFSE NEW ENERGY 2030s & BEYONDTODAY20172000s – MID-2010s Mid-to-
Slide 9: Sharpening our focus on building a differentiated Energy Technology Company
Copyright 2023 Baker Hughes Company. All rights reserved. BAKER HUGHES PR IORIT IES Sharpening our focus on building a differentiated Energy Technology Company TOP PRIORITIES Committed to enhancing shareholder value Optimize corporate structure to enhance our margin and return profile Capitalize on
Slide 10: Portfolio balances cyclical durability & leverage to multiple growth vectors
Portfolio balances cyclical durability & leverage to multiple growth vectors 10STRATEGY Focused on driving growth and optimizing organizational structure 1. Changing the way we operate 2. Capitalizing on growing energy needs 3. Investing for the future Fundamentally re-wiring the organization Simpli
Slide 11: Changing the way we operate
1. Changing the way we operate STRATEGY All actions executed to deliver $150+M cost-out target by year end Copyright 2023 Baker Hughes Company. All rights reserved. OILFIELD SERVICES & EQUIPMENT (OFSE) INDUSTRIAL & ENERGY TECHNOLOGY (IET) CORPORATE FUNCTIONS COST OUT TARGET $60+M $50+M $40+M ACTIONS
Slide 12: Increasing energy demand through ~2040
STRATEGY Copyright 2023 Baker Hughes Company. All rights reserved. Increasing energy demand through ~2040 KEY ENERGY THEMES:PRIMARY GLOBAL ENERGY DEMAND 1: In order to reduce emissions and meet growing overall energy demand, increased investment is required in all forms of low-carbon energy sources
Slide 13: Investing for the future
The future of gas fired power generation Low LCOC2 for small emitters Net-zero H2 Gen II Solvent for large scale Carbon Capture + Additional 7 investments MOFs3 platform for Direct Air Capture Focused on adding capabilities in areas of CCUS, H2 & Clean Power 13STRATEGY Copyright 2023 Baker Hughes Co
Slide 14: Flexible capital allocation policy
Flexible capital allocation policy CAPITAL ALLOCATION Prioritizing a strong balance sheet and returning capital to shareholders Divestments 1.1X PRIORITY STATUS PHILOSOPHY Balance Sheet Dividends Buybacks M&A Technology Investment1 • Maintain a strong balance sheet • Maintain optionality to pay down
Slide 15: 3Q'23 and 2023 Outlook
BKR Revenue $24.8 - $26B Adj. EBITDA $3.65 - $3.8B Outlook GUIDANCE 3Q’23 Outlook IET Revenue $2.45 - $2.75B EBITDA $355 -$415M OFSE Revenue $3.8 - $4.0B EBITDA $635 - $695M Other Corporate costs1 Approx. $95M D&A Approx. $280M BKR Revenue $6.4 - $6.6B Adj. EBITDA $930 - $990M 2023 Outlook IET Order
Slide 16: Industrial & Energy Technology
Industrial & Energy Technology Copyright 2023 Baker Hughes Company. All rights reserved.16
Slide 17: Robust pipeline of LNG projects in line to take FID
IET MACRO OUTLOOK Copyright 2023 Baker Hughes Company. All rights reserved. Robust pipeline of LNG projects in line to take FID KEY IET THEMES:LNG FIDs & Outlook 1: Uniquely positioned to capitalize on unfolding LNG & OOP cycles Leveraging decades of experience in CO2 & Hydrogen to participate in ea
Slide 18: IET Portfolio Overview
GTE + Pumps - CTS Setting up IET for the next phase of growth IET PORTFOLIO OVERVIEW Re-aligning product lines and simplifying the business to drive margin improvement – effective October 1st Equipment $2.6B Services $2.4B Condition Monitoring $0.5B Inspection $1.0B Pumps, Valves & Gears $0.8B PSI &
Slide 19: Gas Technology Equipment & Services Overview
LNG Equipment • Liquefaction module solutions, from large to medium/small production size • Turbo-compression trains • Power Generation solutions • Floating solutions GAS TECHNOLOGY EQUIPMENT & SERVICES OVERVIEW Gas Technology Equipment & Services Supplemented by early Hydrogen & CCUS project develo
Slide 20: Climate Technology Solutions Overview
Copyright 2023 Baker Hughes Company. All rights reserved. CLIMATE TECHNOLOGY SOLUTIONS OVERVIEW Climate Technology Solutions CCUS, Hydrogen, Clean Power & Emissions Abatement Capabilities Sequestration Monitoring Enhanced Oil Recovery Turboexpander + CO2 Compression & Pumps Clean Power • NET Power:
Slide 21: Industrial Solutions & Products Overview
Copyright 2023 Baker Hughes Company. All rights reserved. Condition Monitoring • Condition monitoring and protection devices • Advanced machinery diagnostic software solutions Inspection Sensing: • Ultrasonic • Film, radiography remote visual, X-ray Software & Services: • Pre-commissioning services
Slide 22: IET Digital
Copyright 2023 Baker Hughes Company. All rights reserved. Asset Health Asset Strategy Asset Inspections Yield Throughput Energy & Emissions Asset Performance Management Process Optimization 9+ million sensors on industrial assets 20+ Years of flagship software capabilities 120+ Years of industrial i
Slide 23: IET Segment Results
23IET SEGMENT RESULTS Strong revenue growth driven by Gas Tech Equipment backlog conversion IET Revenues & EBITDA Margin 2Q’23 IET – Gas Technology Revenues 2Q’23 IET – Industrial Technology Revenue Growth1,2 • Revenue growth +34% YoY & 14% QoQ driven by execution of backlog across all product lines
Slide 24: IET Orders
$864 $1,891 $1,611 $788 $702 $790 0 1,000 2,000 2Q'22 1Q'23 2Q'23 $ M ill io ns Gas Tech - Equipment Gas Tech - Services $1,651 $1,594 $3,392 $2,593 $2,402 $816 $763 $897 $940 $880 $2,467 $2,357 $4,289 $3,533 $3,282 0 1,000 2,000 3,000 4,000 5,000 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 $ M ill io ns Industri
Slide 25: IET Targets
Capitalize on macro tailwinds • Natural gas leader across value chain, with significant LNG presence • Leading compression and gas turbine technology, driving differentiation across multiple markets • Growing installed base and service franchise Invest in new strategic initiatives • Growing in indus
Slide 26: Oilfield Services & Equipment
Oilfield Services & Equipment Copyright 2023 Baker Hughes Company. All rights reserved.26
Slide 27: International is the primary growth driver
OFSE MACRO OUTLOOK Copyright 2023 Baker Hughes Company. All rights reserved. International is the primary growth driver KEY OFSE THEMES:UPSTREAM CAPEX VS. OIL DEMAND 1: Baker Hughes well positioned to capture strong international and offshore growth momentum. NAM exposure mitigated by portfolio and
Slide 28: OFSE Portfolio Overview
Oilfield Services & Equipment (OFSE) Copyright 2023 Baker Hughes Company. All rights reserved. OFSE PORTFOLIO OVERVIEW North America $3.8B Latin America $2.1B Europe/CIS/SSA $2.5B Middle East/Asia $4.9B 28% 16% 19% 37% OFSE 2022 REGIONAL SPLIT $13.2B Production Solutions Subsea & Surface Pressure Sy
Slide 29: OFSE expertise spans the lifecycle of the field
Subsea & Surface Pressure Systems (SSPS) Well Construction Completions, Intervention & Measurements (CIM) OFSE expertise spans the lifecycle of the field Production focused portfolio, positioned to enhance recovery and reduce emissions OFSE PORTFOLIO OVERVIEW Production Solutions Drill Bits Drilling
Slide 30: OFSE Strategy
Connecting our leading technology to digital applications that drive enhanced customer outcomes Developing new solutions for current and evolving markets Copyright 2023 Baker Hughes Company. All rights reserved. OFSE STRATEGY Digital Leveraging subsurface to surface portfolio to provide long- term g
Slide 31: OFSE Segment Results
5% 6% 16% 9% 0% 5% 10% 15% 20% North America Latin America Eur/CIS/SSA Middle East / Asia C ha ng e Q oQ 31OFSE SEGMENT RESULTS Oilfield Services & Equipment (OFSE) Results Strong performance driven by international and offshore markets OFSE Revenues & EBITDA Margin OFSE RPO (Remaining Performance O
Slide 32: OFSE Targets
Volume Chemicals normalization Cost synergies Supply chain & product cost 15 .5 % 20 +% Copyright 2023 Baker Hughes Company. All rights reserved. OFSE TARGETS Capitalize on macro tailwinds • Multiyear upstream cycle to bolster growth • Well positioned in key markets – Middle East, Latin America, NAM
Slide 33: Sustainability, Management & Board of Directors Overview
Sustainability, Management & Board of Directors Overview Copyright 2023 Baker Hughes Company. All rights reserved.33
Slide 34: Committed to sustainability
Committed to sustainability SUSTAINABIL ITY Led by our purpose of making energy cleaner, safer, and more efficient for people and the planet 28% Reduction in Scope 1&2 GHG emissions vs. 2019 Enacting new programs to promote inclusion and diversity DRIVING CARBON FOOTPRINT REDUCTION COMMITTED TO DIVE
Slide 35: Corporate Responsibility framework and ESG ratings
Principles Doing the right thing, always People Fostering diversity, equity, and inclusion Baker Hughes Corporate Responsibility framework Copyright 2023 Baker Hughes Company. All rights reserved. SUSTAINABIL ITY Awarded B rating by CDP Awarded AA ESG rating by MSCI Awarded A+ ESG rating by Refiniti
Slide 36: Baker Hughes Management Team
Baker Hughes Management Team Copyright 2023 Baker Hughes Company. All rights reserved. BAKER HUGHES MANAGEMENT TEAM Lorenzo Simonelli Chairman & Chief Executive Officer Nancy Buese Chief Financial Officer Jim Apostolides SVP Enterprise Operational Excellence Ganesh Ramaswamy EVP IET Maria Claudia Bo
Slide 37: Baker Hughes Board of Directors
Baker Hughes Board of Directors Copyright 2023 Baker Hughes Company. All rights reserved. BAKER HUGHES BOARD OF DIRECTORS Lorenzo Simonelli Chairman & CEO • President & CEO of Baker Hughes since 2017 • Board member of Iveco Group N.V. W. Geoffrey Beattie Lead Independent Director • CEO of Generation
Slide 38: Incentive compensation metrics aligned to shareholder returns
Incentive compensation metrics aligned to shareholder returns Copyright 2023 Baker Hughes Company. All rights reserved. INCENTIVE COMPENSATION METRICS Short-term • 70% financial metrics − Free cash flow (35% weighted) − Adjusted EBITDA (25% weighted) − Revenue (10% weighted) • 30% Strategic Blueprin
Slide 39: Appendix
Appendix Copyright 2023 Baker Hughes Company. All rights reserved.39
Slide 40: Strong balance sheet and solid cash flow
Strong balance sheet and solid cash flow F INANCIALS 1. Net Debt / LTM Adj. EBITDA is a non-GAAP measure – see appendix for GAAP to non-GAAP reconciliations 2. As of June, 30 2023: Cash and cash equivalents of $2,805 million and a $3 billion committed unsecured revolving credit facility 3. FCF Conve
Slide 41: Baker Hughes financial results
Baker Hughes financial results F INANCIAL OVERVIEW Strong financial execution BKR Orders & Revenues Segment Revenue & EBITDA Copyright 2023 Baker Hughes Company. All rights reserved. Adj. Op income, Adj. EBITDA and FCF are non-GAAP measure – see appendix for GAAP to non-GAAP reconciliations $23.8 $2
Slide 42: GAAP to Non-GAAP reconciliations
GAAP to Non-GAAP reconciliations APPENDIX Reconciliation of Cash Flow From Operating Activities to Free Cash Flow (in millions) Cash flow reconciliation TY2018 TY2019 TY2020 1Q2021 2Q2021 3Q2021 4Q2021 TY2021 1Q2022 2Q2022 3Q2022 4Q2022 TY2022 1Q2023 2Q2023 Cash flow from operating activities (GAAP)
Slide 43: OFSE & IET reconciliations
OFSE & IET reconciliations APPENDIX FY 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q2023 2Q2023 Oilfield Services & Equipment 16,419 12,304 2,544 3,040 3,136 3,077 11,798 3,270 3,392 3,707 3,721 14,089 4,100 4,192 Gas Technology - Equipment 4,179 3,0
Slide 44: OFSE & IET reconciliations
OFSE & IET reconciliations APPENDIX FY 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 TY 2022 1Q2023 2Q2023 Well Construction 4,222 3,257 743 800 844 914 3,301 883 936 991 1,043 3,854 1,061 1,076 Completions, Intervention & Measurements 4,491 3,614 716 782 791 8
Slide 45: OFSE & IET GAAP to Non-GAAP reconciliations
OFSE & IET GAAP to Non-GAAP reconciliations APPENDIX Operating Income (loss) by Segment (GAAP) FY 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 TY 2022 1Q2023 2Q2023 Oilfield Services & Equipment 972 506 147 199 204 280 830 213 249 324 416 1,201 371 417 Industr
Slide 46: OFSE & IET GAAP to Non-GAAP reconciliations
OFSE & IET GAAP to Non-GAAP reconciliations APPENDIX 3Q 2023 Outlook Range 2023 FY Outlook Range 3Q 2023 FY 2023 Operating Income (loss) by Segment (GAAP) 415 – 475 1,620 – 1,820 Add: Depreciation & Amortization 220 880 EBITDA by Segment (non-GAAP) 635 - 695 2,500 - 2,700 Reconciliation of Operating
Slide 47: Baker Hughes
Baker Hughes =
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