Baker Hughes Company · NASDAQ:BKR
Baker Hughes — Q4 2023 Earnings Presentation
29 slides from Baker Hughes's earnings presentation, Jan 24, 2024
Slide 1: 4Q 2023 Results
4Q 2023 Results January 24, 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,
Slide 2: Forward-looking statements and non-GAAP disclaimer
2 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 Act of 1934, as amended, (each a “forward-looking state
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: 2023 financial results
FINANCIALS 4 2023 financial results Continued margin Free cash Record orders & revenues improvement … flow generation exceeds achieved 14.8% Adj. EBITDA margin expectations Orders Adj. EBITDA Free cash flow $30.5B $3,763M $2,045M 14% YoY 26% YoY 83% YoY Revenue Adj. operating income Adjusted Diluted
Slide 5: Highlights
FY & 4Q 2023 RESULTS 5 5 Highlights Strong performance to end a record-breaking year … set records for all our primary financial metrics Record IET orders of $3B, brings FY’23 to $14.2B … booked the ADNOC Ruwais LNG project & multiple OOP orders during the quarter 4Q’23 Adjusted EBITDA above the mid
Slide 6: Multi-year upstream growth cycle continues
OFSE MACRO OUTLOOK 6 Multi-year upstream growth cycle continues Growing investment required to meet rising energy demand 2024 THEMES UPSTREAM CAPEX OUTLOOK 1 +4.3% Decelerating oil demand growth 800 CAGR OPEC+ discipline keeps oil markets balanced 700 International the primary growth driver 600 SSA
Slide 7: On track for another strong year of FIDs in 2024
LNG FID & CAPACITY OUTLOOK 7 On track for another strong year of FIDs in 2024 The LNG project pipeline continues to grow, both in the US and internationally LNG FIDS & FID OUTLOOK 1 LNG CAPACITY OUTLOOK 1 ~160 ~800 ~65 ~185 ~15 ~490 MTPA ~475 ~30-60 MTPA 71 57.3 ~570 50 420 435 36 20 3 2022 Online i
Slide 8: Energy Policy & Permitting
ENERGY POLICY UPDATE 8 Energy Policy & Permitting A critical element of the successful development of the new energy ecosystem COP28 EMISSIONS PERMITTING POLICY Baker Hughes well represented at Strong progress on methane State of Louisiana granted US Treasury 45V hydrogen tax COP 28 emissions in the
Slide 9: Broader IET portfolio exposed to strong growth tailwinds
IET 9 Broader IET portfolio exposed to strong growth tailwinds ~50% of our business is focused on serving customers outside of LNG Midstream Growth End Markets 11% FPSO’s Refining Chemicals LNG Upstream 35% Pipelines Storage Gas Processing 24% 2023 Revenue split by end market Renewables Monitoring M
Slide 10: Nancy Buese, Chief Financial Officer
Nancy Buese Chief Financial Officer 10 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 11: 4Q 2023 financial results
FINANCIALS 11 4Q 2023 financial results Continued margin Free cash Strong revenue growth improvement … flow generation ahead of 16% Adj. EBITDA margin expectations Orders Adj. EBITDA Free cash flow $6.9B $1,091M $633M 14% YoY 15% YoY 4% YoY Revenue Adj. operating income Adjusted EPS $6.8B $816M $0.5
Slide 12: Strong balance sheet and solid cash flow
FINANCIALS 12 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 $2.05B 1 3 Net debt / LTM Adj. EBITDA FCF in ’23 A3/A- Credit Ratings from Moody’s and S&P +83% vs. ’22 $5.6B 54%
Slide 13: Flexible capital allocation policy
CAPITAL ALLOCATION 13 Flexible capital allocation policy 65% of free cash flow returned to shareholders in 2023 60%-80% FCF 4 PRIORITY Balance Technology Dividends Buybacks M&A Sheet Investment1 PHILOSOPHY • Maintain a strong • Focus growth capital on • Prioritize dividend • Repurchase shares to off
Slide 14: Oilfield Services & Equipment (OFSE) results
OFSE SEGMENT RESULTS 14 Oilfield Services & Equipment (OFSE) results Strong performance driven by international markets across all product lines OFSE Revenues & EBITDA Margin 4Q’23 OFSE - Revenue Growth by Geography1 5,000 4% 17.9% 20% 17.1% 17.0% 2% 4,000 2% 2% 2% Change QoQ EBITDA Margin 3,000 $ M
Slide 15: Industrial & Energy Technology (IET) orders
IET SEGMENT RESULTS 15 Industrial & Energy Technology (IET) orders Record orders driven by continued strength in LNG IET Orders Gas Technology Orders Gas Tech Industrial Tech CTS Gas Tech - Equipment Gas Tech - Services 5,000 $4,289 $4,334 3,000 $2,813 $2,455 $219 $49 4,000 $3,533 $748 $824 $3,282 $
Slide 16: Industrial & Energy Technology (IET) results
IET SEGMENT RESULTS 16 Industrial & Energy Technology (IET) results Strong revenue growth driven by Gas Tech Equipment backlog conversion IET Revenues & EBITDA Margin 4Q’23 IET – Gas Technology Revenues 3,000 $2,879 20% Gas Tech - Services Gas Tech - Equipment $2,691 2,500 18.4% 2,500 15% 2,000 $1,8
Slide 17: Unlocking the full potential of our business
CHANGING THE WAY WE OPERATE 17 Unlocking the full potential of our business Optimized organizational structure in place – focus on continuous improvement Delivered $150M+ of cost savings in 2023 through organizational simplification and consolidation Focused on driving margins & returns above 2024 F
Slide 18: 2024 outlook
GUIDANCE 18 2024 outlook 1Q’24 Outlook 2024 Outlook BKR BKR Revenue $6.10 - $6.60B Revenue $26.50 - $28.50B Adj. EBITDA $880 - $960M Adj. EBITDA $4.10 - $4.50B OFSE OFSE Revenue $3.70 - $3.95B Revenue $15.75 - $16.75B EBITDA $630 - $670M EBITDA $2.78 - $3.02B IET IET Revenue $2.40 - $2.65B Orders $1
Slide 19: Lorenzo Simonelli, Chairman & Chief Executive Officer
Lorenzo Simonelli Chairman & Chief Executive Officer 19 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 20: Executing our strategy across three time horizons
STRATEGY 20 Executing our strategy across three time horizons Delivered strong EBITDA growth over the last four years BKR EBITDA MARGIN RATE PROGRESS Well-defined strategy over the next three time horizons to drive differentiated growth 14.8% 15.6%1 Expanding commercial opportunities that 14.1% prov
Slide 21: Appendix
Appendix 21 Copyright 2024 Baker Hughes Company. All rights reserved.
Slide 22: Results by Reporting Segment: Oilfield Services & Equipment
APPENDIX 22 Results by Reporting Segment Oilfield Services & Equipment (in millions) Three Months Ended Variance December 31, September 30, December 31, Year-over- Segment results 2023 2023 2022 Sequential year Orders $ 3,874 $ 4,178 $ 3,721 (7%) 4% Revenue $ 3,956 $ 3,951 $ 3,579 —% 11% Operating i
Slide 23: Results by Reporting Segment: Industrial & Energy Technology
APPENDIX 23 Results by Reporting Segment Industrial & Energy Technology (in millions) Three Months Ended Variance December 31, September 30, December 31, Segment results 2023 2023 2022 Sequential Year-over-year Orders $ 3,030 $ 4,334 $ 4,289 (30%) (29%) Revenue $ 2,879 $ 2,691 $ 2,325 7% 24% Operati
Slide 24: GAAP to Non-GAAP reconciliations
APPENDIX 24 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 Net cash flow from operating activities (GAAP) 2,374 72 321 597 898 1,888 4
Slide 25: Additional reconciliations
APPENDIX 25 Additional reconciliations Orders by Reporting Segment ($ 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 Total Oilfield Services & Equipment $ 11,798 $ 3,270 $ 3,392 $ 3,707 $ 3,721 $ 14,089 $ 4,100 $ 4,1
Slide 26: OFSE & IET reconciliations
APPENDIX 26 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 Well Construction $ 3,301 $ 883 $ 936 $ 991 $ 1,043 $ 3,854 $ 1,061
Slide 27: OFSE & IET GAAP to Non-GAAP reconciliations
APPENDIX 27 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 Oilfield Services
Slide 28: OFSE & IET GAAP to Non-GAAP reconciliations: outlook framework
APPENDIX 28 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 1Q 2024 Outlook Range 2024 FY Outlook Range 1Q 2024 FY 2024 Operating Income (loss) by Segment (GAA
Slide 29: Baker Hughes
Baker Hughes =