Baker Hughes Company · NASDAQ:BKR
Baker Hughes — Q2 2024 Earnings Presentation
28 slides from Baker Hughes's earnings presentation, Jul 26, 2024
Slide 1: 2Q 2024 Results
2Q 2024 Results July 26, 2024 Copyright 2024 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, tr
Slide 2: Forward-looking statements disclaimer
2 This presentation (and oral statements made regarding the subjects of this presentation) 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
Slide 3: Lorenzo Simonelli, Chairman & Chief Executive Officer
Lorenzo Simonelli Chairman & Chief Executive Officer 3 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 4: Highlights
2Q 2024 RESULTS 4 4 Highlights Strong second-quarter results … highlighted by exceptional operational performance across both segments. Marks the 6th consecutive quarter of meeting or exceeding our EBITDA guidance Strong orders performance … $3.5B IET orders, driven by the highest non-LNG equipment
Slide 5: Upstream growth to continue
MACRO OUTLOOK 5 Upstream growth to KEY THEMES continue International outlook unchanged Continue to expect high-single-digit spending growth in ’24; OPEC+ cuts extended but plan to bring back barrels starting in 4Q’24 Saudi MSC reduction Main impacts in 2025 / 2026; BKR set to benefit from increased
Slide 6: Natural Gas & LNG demand outlook continues to strengthen
NATURAL GAS & LNG MACRO 6 Natural Gas & LNG demand outlook continues to strengthen Supported by accelerating demand in Asia and resiliency in developed economies BKR GLOBAL GAS DEMAND OUTLOOK BY REGION 1 LNG OFFTAKE ACTIVITY YTD 2 Upside to outlook could be driven by accelerated coal switching, YTD
Slide 7: Strong non-LNG order momentum across our Gas Tech Equipment portfolio
GAS TECH EQUIPMENT 7 Strong non-LNG order momentum across our Gas Tech Equipment portfolio Expecting GTE’s non-LNG orders to double in 2024 KEY END MARKETS REFINING & PIPELINE TRANSPORT FPSOs ONSHORE PRODUCTION PETROCHEMICALS INDUSTRIAL INFRASTRUCTURE POWER INFRASTRUCTURE INFRASTRUCTURE INDUSTR I AL
Slide 8: Nancy Buese, Executive Vice President & Chief Financial Officer
Nancy Buese Executive Vice President & Chief Financial Officer 8 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 9: 2Q 2024 financial results
FINANCIALS 9 2Q 2024 financial results Strong revenue growth Strong Adj. EBITDA growth & Strong Adj. EPS & and resilient orders continued margin expansion shareholder returns growth Orders Adj. EBITDA Adj. EPS $7.5B $1.13B $0.57 1% YoY 25% YoY 46% YoY Revenue Adj. operating income Shareholder return
Slide 10: Strong balance sheet and solid cash flow
FINANCIALS 10 Strong balance sheet and solid cash flow STRONG BALANCE SHEET PRIORITIZING FREE CASH FLOW Enables financial flexibility Focused on maximizing free cash flow generation 0.9X 1 $0.1B Net debt / LTM Adj. EBITDA A3/A- FCF in 2Q ’24 $0.6B Credit Ratings from Moody’s and S&P $5.3B Total Liqu
Slide 11: Flexible capital allocation policy
CAPITAL ALLOCATION 11 Flexible capital allocation policy Prioritizing a strong balance sheet and returning capital to shareholders 60%-80% FCF 2 PRIORITY Balance sheet Technology Dividends Buybacks M&A investment PH ILOS O PH Y • Maintain a strong • Focus growth capital on • Prioritize dividend grow
Slide 12: Industrial & Energy Technology (IET) orders
IET SEGMENT RESULTS 12 Industrial & Energy Technology (IET) orders Orders driven by non-LNG growth IET Orders Gas Technology Orders 6,000 Gas Tech Industrial Tech CTS 2,000 Gas Tech Equipment Gas Tech Services $4,334 $1,547 $49 $1,493 4,000 $3,282 $3,458 1,500 $1,230 $ Millions $748 $ Millions $3,03
Slide 13: Industrial & Energy Technology (IET) results
IET SEGMENT RESULTS 13 Industrial & Energy Technology (IET) results Sustained growth in Gas Tech Equipment IET Revenues & EBITDA Margin1 2Q‘24 IET – Gas Technology Revenues 15.9% Gas Tech - Equipment Gas Tech - Services 14.9% 2,500 $2,230 14.7% 3,000 16% 2,000 $1,824 EBITDA Margins $1,626 $691 12% $
Slide 14: Oilfield Services & Equipment (OFSE) results
OFSE SEGMENT RESULTS 14 Oilfield Services & Equipment (OFSE) results Strong EBITDA performance driven by cost focus and commercial discipline OFSE Revenues & EBITDA Margin1 2Q’24 OFSE - Revenue Growth by Geography 10% 5,000 17.8% 20% 16.4% 17.0% 8% 4,000 15% EBITDA Margin Change QoQ $ Millions 3,000
Slide 15: Unlocking the full potential of our business
CHANGING THE WAY WE OPERATE 15 Unlocking the full potential of our business Exceptional operational performance & continuous improvement driving margin growth Margin expansion expectations almost 2X prior guidance2, driven by strong first half performance and ongoing strategy execution KEY AREAS OF
Slide 16: 3Q'24 & FY 2024 outlook
GUIDANCE 16 3Q’24 & FY 2024 outlook 3Q’24 OUTLOOK 1 2024 OUTLOOK 1 BKR BKR Revenue $6.97 - $7.46B Revenue $27.60 - $28.40B Adj. EBITDA $1.14 - $1.26B Adj. EBITDA $4.40 - $4.65B OFSE OFSE Revenue $3.95 - $4.15B Revenue $15.70 - $16.10B EBITDA $735 - $785M EBITDA $2.83 - $2.97B IET IET Revenue $3.02 -
Slide 17: Lorenzo Simonelli, Chairman & Chief Executive Officer
Lorenzo Simonelli Chairman & Chief Executive Officer 17 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 18: Our strategy is delivering
OUR STRATEGY 18 Our strategy is delivering Strong EBITDA growth over the last four years BKR EBITDA MARGIN & RATE PROGRESSION EBITDA 16.2%1 Clear progress towards margin targets EBITDA Margin 5500 16.00% 14.8% 5000 15.6%2 14.1% Strengthening tailwinds in IET 4500 13.1% 14.00% 4000 3500 11.4% 12.00 %
Slide 19: Appendix
Appendix 19 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 20: Results by Reporting Segment: Oilfield Services & Equipment
APPENDIX 20 Results by Reporting Segment Oilfield Services & Equipment (in millions) Three Months Ended Variance Year-over- Segment results June 30, 2024 March 31, 2024 June 30, 2023 Sequential year Orders $ 4,068 $ 3,624 $ 4,192 12% (3%) Revenue $ 4,011 $ 3,783 $ 3,877 6% 3% Operating income $ 493
Slide 21: Results by Reporting Segment: Industrial & Energy Technology
APPENDIX 21 Results by Reporting Segment Industrial & Energy Technology (in millions) Three Months Ended Variance Segment results June 30, 2024 March 31, 2024 June 30, 2023 Sequential Year-over-year Orders $ 3,458 $ 2,918 $ 3,282 19% 5% Revenue $ 3,128 $ 2,634 $ 2,438 19% 28% Operating income $ 442
Slide 22: GAAP to Non-GAAP reconciliations
APPENDIX 22 GAAP to Non-GAAP reconciliations Reconciliation of Net Cash Flow From Operating Activities to Free Cash Flow ($ in millions) FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 FY 2023 1Q 2024 2Q 2024 Net cash flow from operating activities (GAAP) $ 2,374 $ 72
Slide 23: Additional reconciliations
APPENDIX 23 Additional reconciliations Orders by Reporting Segment ($ in millions) Total Oilfield Services & Equipment FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 FY 2023 1Q 2024 2Q 2024 Oilfield Services & Equipment $ 11,798 $ 3,270 $ 3,392 $ 3,707 $ 3,721 $ 14,0
Slide 24: OFSE & IET reconciliations
APPENDIX 24 OFSE & IET reconciliations Consolidated Revenue by Reporting Segment and Product Line ($ in millions) Oilfield Services & Equipment FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 FY 2023 1Q 2024 2Q 2024 Well Construction $ 3,301 $ 883 $ 936 $ 991 $ 1,043
Slide 25: OFSE & IET GAAP to Non-GAAP reconciliations
APPENDIX 25 OFSE & IET GAAP to Non-GAAP reconciliations Reconciliation of Operating Income (Loss) by Segment (GAAP) to EBITDA (non-GAAP) ($ in millions) Operating Income (loss) by Segment (GAAP) FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 FY 2023 1Q 2024 2Q 2024 O
Slide 26: OFSE & IET GAAP to Non-GAAP reconciliations: Outlook Framework
APPENDIX 26 OFSE & IET GAAP to Non-GAAP reconciliations Reconciliation of Operating Income (Loss) by Segment (GAAP) to EBITDA (non-GAAP) Outlook Framework ($ in millions) Oilfield Services & Equipment 3Q 2024 Outlook Range 2024 FY Outlook Range 3Q 2024 FY 2024 Operating Income (loss) by Segment (GAA
Slide 27: Follow our journey
bakerhughes.com Follow our @bakerhughesco journey Baker Hughes bakerhughesco @bakerhughesco 27 Confidential. Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 28: Baker Hughes
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