Baker Hughes Company · NASDAQ:BKR
Baker Hughes — Q2 2023 Earnings Presentation
27 slides from Baker Hughes's earnings presentation, Jul 19, 2023
Slide 1: 2Q 2023 Results
2Q 2023 Results July 19, 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, tr
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: 2Q 2023 Highlights
2Q 2023 RESULTS 4 4 2Q 2023 Highlights Strong order momentum in IET maintained … third straight quarter of orders exceeding $3B, including $900M in LNG equipment orders led by 17.6 MTPA Rio Grande project Continued offshore strength drives major award for SSPS … booked order for the Baleine field of
Slide 5: Energy fundamentals remain solid despite macro uncertainty
MACRO OUTLOOK 5 Energy fundamentals remain solid despite macro uncertainty Despite oil and gas price volatility, we maintain a constructive UNIQUE AND outlook for global upstream spending in 2023 ... supportive EXTENDED of double-digit upstream spending growth in 2023 CYCLE UNFOLDING Softness in Nor
Slide 6: Portfolio balances cyclical durability & leverage to multiple growth vectors
STRATEGY 6 Portfolio balances cyclical durability & leverage to multiple growth vectors Focused on driving growth and optimizing organizational structure Changing the Capitalizing on Tackling our customers’ way we operate investment cycles biggest challenges Fundamentally re-wiring Internationally f
Slide 7: Strong customer positioning with unique technology portfolio
CUSTOMER & SECTOR DYNAMICS 7 Strong customer positioning with unique technology portfolio Well positioned for growth in integrated solutions utilizing subsurface to surface capabilities IET IET DS NEW ENERGY IET BAKER TPS NEW ENERGY H UGH ES PORTFOLI O OFE VIS ION OFSE OFSE OFSE OFS 2000s – MID-2010
Slide 8: Tailwinds continue across both business segments
TRENDS & COMMERCIAL WINS 8 Tailwinds continue across both business segments OFSE IET OILFIELD SERVICES & EQUIPMENT INDUSTRIAL & ENERGY TECHNO LO GY Strength in International and offshore helping Strong LNG and OOP order momentum to offset NAM weakness continues … notable Rio Grande & Equinor orders
Slide 9: Committed to sustainability
SUSTAINABILITY 9 Committed to sustainability 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 DRIVING CARBON HEALTH, SAFETY & COMMITTED TO DIVERSITY, ETHICS, COMPLIANCE, FOOTPRINT REDUCTION WELLNESS EQU
Slide 10: Nancy Buese, Chief Financial Officer
Nancy Buese Chief Financial Officer 10 Copyright 2023 Baker Hughes Company. All rights reserved.
Slide 11: 2Q 2023 Financial Results
FINANCIALS 11 2Q 2023 Financial Results Continued YoY margin Significant increase Very strong YoY order & improvement … in YoY free cash revenue growth 14.4% Adj. EBITDA margin flow generation Orders Adj. EBITDA Free cash flow $7.5B $907M $623M 28% YoY 39% YoY +$476M YoY Revenue Adj. operating incom
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 Strong balance sheet enables Portfolio focused on maximizing financial flexibility free cash flow generation 1.1X $0.6B 1 3 Net debt / LTM Adj. EBITDA FCF in 2Q’23 A3/A- Credit Ratings from Moody’
Slide 13: Flexible Capital Allocation Policy
CAPITAL ALLOCATION 13 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 14: Changing the way we operate
STRATEGY 14 Changing the way we operate All actions executed to deliver $150+M cost-out target by year end Focused on driving margins OILFIELD SERVICES & INDUSTRIAL & ENERGY CORPORATE above targets EQUIPMENT (OFSE) TECHNOLOGY (IET) FUNCTIONS COST OUT $60+M $50+M $40+M 20+% TARGET EBITDA margins acro
Slide 15: Oilfield Services & Equipment (OFSE) Results
OFSE SEGMENT RESULTS 15 Oilfield Services & Equipment (OFSE) Results Strong performance driven by international and offshore markets OFSE Revenues & EBITDA Margin 2Q’23 OFSE - Revenue Growth by Geography1 20% 4,000 $3,577 $3,877 $3,230 20% 16% 15% EBITDA Margin 3,000 Change QoQ $ Millions 16.2% 16.4
Slide 16: Industrial & Energy Technology (IET) Orders
IET SEGMENT RESULTS 16 Industrial & Energy Technology (IET) Orders Strong orders driven by continued strength in LNG & Onshore/Offshore Production IET Orders Gas Technology Orders Gas Tech - Equipment Gas Tech - Services Industrial Tech Gas Tech 5,000 $4,289 $1,891 2,000 $3,533 $1,611 4,000 $897 $3,
Slide 17: IET Results
IET SEGMENT RESULTS 17 IET Results Strong revenue growth driven by Gas Tech Equipment backlog conversion IET Revenues & EBITDA Margin 2Q’23 IET – Gas Technology Revenues Gas Tech - Services Gas Tech - Equipment $2,438 2,000 2,500 20% $1,658 15.7% $2,138 $1,418 15% 1,500 EBITDA Margin 2,000 $1,098 $
Slide 18: 2023 Outlook
GUIDANCE 18 2023 Outlook 3Q’23 Outlook 2023 Outlook BKR BKR Revenue $6.4 - $6.6B Revenue $24.8 - $26B Adj. EBITDA $930 - $990M Adj. EBITDA $3.65 - $3.8B OFSE OFSE Revenue $3.8 - $4.0B Revenue $15.1 - $15.7B EBITDA $635 - $695M EBITDA $2.5 - $2.7B IET IET Revenue $2.45 - $2.75B Orders $11.5 - $12.5B
Slide 19: Action plan to enhance shareholder value
OUR STRATEGIC PURPOSE 19 Action plan TOP PRIORITIES to enhance Capitalize on the growth opportunities across OFSE and IET, including LNG and New Energy shareholder value Increasing R&D to developing new energy technology portfolio in hydrogen, carbon capture and clean power Optimize corporate struct
Slide 20: Copyright 2023 Baker Hughes Company. All rights reserved.
20 Copyright 2023 Baker Hughes Company. All rights reserved.
Slide 21: Appendix
Appendix 21 Copyright 2023 Baker Hughes Company. All rights reserved.
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) Cash flow reconciliation TY2018 TY2019 TY2020 1Q2021 2Q2021 3Q2021 4Q2021 TY2021 1Q2022 2Q2022 3Q2022 4Q2022 TY2022 1Q2023 2Q2023 Cash flow from operating activities (GA
Slide 23: OFSE & IET reconciliations
APPENDIX 23 OFSE & IET 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 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 4,1
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 TY 2022 1Q2023 2Q2023 Well Construction 4,222 3,257 743 800 844 914 3,301 883 936 991 1,043 3,854 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 TY 2022 1Q2023 2Q20
Slide 26: OFSE & IET GAAP to Non-GAAP reconciliations
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 2023 Outlook Range 2023 FY Outlook Range 3Q 2023 FY 2023 Operating Income (loss) by Segment (GAAP)
Slide 27: Baker Hughes
Baker Hughes =