Baker Hughes Company · NASDAQ:BKR
Baker Hughes — Q3 2023 Earnings Presentation
27 slides from Baker Hughes's earnings presentation, Oct 26, 2023
Slide 1: 3Q 2023 Results
3Q 2023 Results October 26, 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,
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 2023 Baker Hughes Company. All rights reserved.
Slide 4: 3Q 2023 highlights
3Q 2023 RESULTS 4 4 3Q 2023 highlights LNG strength drives record IET orders … of $4.3B and a fourth straight quarter of orders exceeding $3B, including ~$2.5B in LNG equipment orders led by Venture Global award Major awards for SSPS … booked 11 XT order from a sub-Saharan African operator for subse
Slide 5: Energy fundamentals remain strong despite macro & political uncertainty
MACRO OUTLOOK 5 Energy fundamentals remain strong despite macro & political uncertainty Multi-year investment cycles underway in both upstream & LNG markets UPSTREAM OIL & GAS LNG MARKET Confident in our 2023 outlook - development plans LNG market remains tight … recent price spikes mostly set throu
Slide 6: On track for at least 65 MTPA of LNG FIDs in 2023
LNG FID & CAPACITY OUTLOOK 6 On track for at least 65 MTPA of LNG FIDs in 2023 The LNG project pipeline continues to grow, both in the US and internationally LNG FIDS & FID OUTLOOK 1 LNG CAPACITY OUTLOOK 1 ~800 ~65 ~65 ~200 ~135 ~200 ~15 ~490 MTPA ~475 ~30-60 MTPA 71 50 53 ~570 36 420 435 20 3 2018
Slide 7: Long-term energy demand growth expected beyond 2040
MACRO OUTLOOK 7 Long-term energy demand growth expected beyond 2040 Driven by rising population & increasing energy consumption per capita in the developing world PRIMARY GLOBAL ENERGY DEMAND BY ENERGY SOURCE 1 % MAJORS SPEND ON LOW CARBON PROJECTS 2022 VS. 2027 2 Growth backdrop provides strong sup
Slide 8: Executing our strategy across three time horizons
STRATEGY 8 Executing our strategy across three time horizons Delivering on near-term targets while laying the foundations for long-term success HORIZON ONE HORIZON TWO HORIZON THREE THROUGH 2025 MID TO LATE 2020’S TO 2030 & BEYOND Market Multi year growth cycles underway Growth moderates in upstream
Slide 9: Nancy Buese, Chief Financial Officer
Nancy Buese Chief Financial Officer 9 Copyright 2023 Baker Hughes Company. All rights reserved.
Slide 10: 3Q 2023 financial results
FINANCIALS 10 3Q 2023 financial results Continued margin Strong increase Significant order & improvement … in free cash revenue growth 14.8% Adj. EBITDA margin flow generation Orders Adj. EBITDA Free cash flow $8.5B $983M $592M 40% YoY 30% YoY +$42% YoY Revenue Adj. operating income Adjusted EPS $6.
Slide 11: Strong balance sheet and solid cash flow
FINANCIALS 11 Strong balance sheet and solid cash flow STRONG BALANCE SHEET PRIORITIZING FREE CASH FLOW Strong balance sheet enables Portfolio focused on maximizing financial flexibility free cash flow generation 1.0X $0.6B 1 3 Net debt / LTM Adj. EBITDA FCF in 3Q’23 A3/A- Credit Ratings from Moody’
Slide 12: Flexible capital allocation policy
CAPITAL ALLOCATION 12 Flexible capital allocation policy Prioritizing a strong balance sheet and returning capital to shareholders 60%-80% FCF 4 PRIORITY Balance Technology Dividends Buybacks M&A Sheet Investment1 PHILOSOPHY • Maintain a strong • Focus growth capital on • Prioritize dividend • Repur
Slide 13: Oilfield Services & Equipment (OFSE) results
OFSE SEGMENT RESULTS 13 Oilfield Services & Equipment (OFSE) results Strong performance driven by international markets across all product lines OFSE Revenues & EBITDA Margin 3Q’23 OFSE - Revenue Growth by Geography1 6% 20% $3,877 $3,951 5% 4,000 $3,403 3% 4% EBITDA Margin 17.0% Change QoQ 3,000 16.
Slide 14: Industrial & Energy Technology (IET) orders
IET SEGMENT RESULTS 14 Industrial & Energy Technology (IET) orders Record orders driven by continued strength in LNG IET Orders Gas Technology Orders Industrial Tech Gas Tech Gas Tech - Equipment Gas Tech - Services 3,000 $2,820 5,000 $4,289 $4,334 4,000 $3,533 $3,282 $897 $790 $ Millions 2,000 $ Mi
Slide 15: IET results
IET SEGMENT RESULTS 15 IET results Strong revenue growth driven by Gas Tech Equipment backlog conversion IET Revenues & EBITDA Margin 3Q’23 IET – Gas Technology Revenues 3,000 20% $2,691 Gas Tech - Services Gas Tech - Equipment $2,438 2,000 $1,892 2,500 16.6% 15% $1,658 EBITDA Margin 1,500 $1,239 $6
Slide 16: Setting up IET for the next phase of growth
IET PORTFOLIO OVERVIEW 16 Setting up IET for the next phase of growth Re-aligning product lines and simplifying the business to drive margin improvement – effective October 1st GAS TECHNOLOGY INDUSTRIAL TECHNOLOGY Equipment Services Condition Inspection Pumps, Valves & PSI & Controls1 Monitoring Gea
Slide 17: IET long-term growth visibility is a key differentiator
IET PORTFOLIO OVERVIEW 17 IET long-term growth visibility is a key differentiator Meaningful long-term FCF expansion driven by structural growth in IET On track to book ~$9 billion of LNG equipment orders in 2022/23 – driving strong equipment backlog coverage Global LNG installed base to increase 70
Slide 18: 2023 outlook
GUIDANCE 18 2023 outlook 4Q’23 Outlook 2023 Outlook2 BKR BKR Revenue $6.7 - $7.1B Revenue $25.4 - $25.8B Adj. EBITDA $1,050 - $1,110M Adj. EBITDA $3.7 - $3.8B OFSE OFSE Revenue $3.85 - $4.05B Revenue $15.3 - $15.5B EBITDA $675 - $735M EBITDA $2.55 - $2.65B IET IET Revenue $2.8 - $3.1B Orders $14.0 -
Slide 19: Appendix
Appendix 19 Copyright 2023 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 September 30, June 30, September 30, Year-over- Segment results 2023 2023 2022 Sequential year Orders $ 4,178 $ 4,192 $ 3,707 —% 13% Revenue $ 3,951 $ 3,877 $ 3,403 2% 16% Operating incom
Slide 21: Results by reporting segment: Industrial & Energy Technology
APPENDIX 21 Results by reporting segment Industrial & Energy Technology (in millions) Three Months Ended Variance September 30, June 30, September 30, Year-over- Segment results 2023 2023 2022 Sequential year Orders $ 4,334 $ 3,282 $ 2,357 32% 84% Revenue $ 2,691 $ 2,438 $ 1,967 10% 37% Operating in
Slide 22: GAAP to Non-GAAP reconciliations
APPENDIX 22 GAAP to Non-GAAP reconciliations Reconciliation of Cash Flow From Operating Activities to Free Cash Flow ($ in millions) FY 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 Cash flow from operating activities (GAAP) 2,12
Slide 23: Additional reconciliations
APPENDIX 23 Additional reconciliations Orders by Reporting Segment (in millions) FY 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 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
Slide 24: OFSE & IET reconciliations
APPENDIX 24 OFSE & IET reconciliations Consolidated Revenue by Reporting Segment and Product Line ($ in millions) FY 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2Q 2023 3Q 2023 Well Construction 4,222 3,257 743 800 844 914 3,301 883 936 991 1,
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 2019 FY 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023 2
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 4Q 2023 Outlook Range 2023 FY Outlook Range 4Q 2023 FY 2023 Operating Income (loss) by Segment (GAAP)
Slide 27: Baker Hughes
Baker Hughes =