Baker Hughes Company · NASDAQ:BKR
Baker Hughes — Baker Hughes a GE — Barclays 2017 CEO Energy - Power Conference
21 slides from Baker Hughes's conference presentation, Sep 5, 2017
Slide 1: Barclays 2017 CEO Energy - Power Conference
Barclays 2017 CEO Energy - Power Conference Lorenzo Simonelli President & CEO September 5, 2017
Slide 2: Caution Concerning Forward-Looking Statements
2 Caution Concerning Forward - Looking Statements 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
Slide 3: 65 days in … CEO thoughts
65 days in … CEO thoughts 3 x BHGE solutions even more critical in uncertain environment x Customer feedback overwhelmingly positive x GE and public shareholder priorities fully aligned x Integration team executing well … employees excited and engaged x BHGE uniquely positioned … broad portfolio, gl
Slide 4: Product & regional leadership team
Product & regional leadership team Experienced BHGE leadership team … best of both companies 4 Corporate leaders x Leadership team has significant experience in O&G industry … best of both companies x Limiting re - orgs & leadership changes … no execution disruptions Turbomachinery & Process Solutio
Slide 5: Priorities
Priorities 5 x Grow market share x Increase margin rates x Above peer group cash conversion 1 2 Execute for customers … strengthen presence in key basins Deliver on synergies & execute to full potential 3 Bring cultures together … combine dynamic of the oilfield & process rigor 4 Generate above peer
Slide 6: Market weaker vs deal signing … long-term fundamentals remain intact
0 500 1,000 1,500 2,000 2,500 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul - 17 Source: Baker Hughes Rig Count, IHS Markit Global Energy Scenarios Market weaker vs deal signing … long - term fundamentals remain intact OFS activity recovering x US up 45% since Q4’16, RoW up 3% … pricing chall
Slide 7: World's only fullstream Oil & Gas company
World’s only fullstream Oil & Gas company … ~70,000 employees in 120+ countries - a) 7 Baker Hughes, a GE company … broad solutions for customers, investing in leading technology through the cycle Differentiated portfolio … leading franchises Oilfield Services • Drilling Services, Logging & Evaluati
Slide 8: Technology leader … from exploration to production
Technology leader … from exploration to production 8 NOVA LT & LM family x Nova efficiency , LM9000: emissions 50%, TCO 13% Drone inspection x inspection costs … safety & cycle - time x Continuing to invest in R&D through the cycle … ~3% of sales annually x Technology investment + GE Store
Slide 9: Twinza Oil … executing on fullstream capabilities
Won as a result of differentiated capability across the value chain 9 Twinza Oil … executing on fullstream capabilities Deal overview Fullstream products & services included x Uses BHGE full capability to deliver integrated services & equipment with state of the art approach x Delivers increased syn
Slide 10: Expanding software solutions leadership
10 Expanding software solutions leadership Expanding leadership position Digital commitments YE’16 ‘17 YTD 2X growth $0.4 $0.8 • Digital commitments up ~2x since 2016 • Expanding suite of offerings … tangible progress with customers • Expand presence with key global customers … partner to drive digi
Slide 11: BHGE differentiators
11 BHGE differentiators Differentiated versus all peers in the sector Broadest offerings Unique ability to deliver productivity for customers Most balanced portfolio Stable earnings profile throughout cycles … increasing visibility Innovation engine Technology & digitally driven … revolutionizing th
Slide 12: Leading technology provider in Oilfield Services; Turbomachinery & Process Solutions
Leading technology provider in Oilfield Services x 100 - year legacy, technology focused x Industry leading products and solutions ... strong global presence x Focus on execution, reliability & cost … increase market share Orders Sales Operating income $4.9 1H’17 2% $4.9 ($ billions) Global technolo
Slide 13: Unique product offerings in Oilfield Equipment; Digital Solutions
Unique product offerings in Oilfield Equipment Orders Sales Operating income 4% $1.3 ($ billions) x Strong execution & technology pipeline x Well positioned with key customers … market remains challenging x Fullstream strategy … launch new business models 1H’17 $1.4 Industry leading Digital Solution
Slide 14: Integration priorities
14 Integration priorities 1 Clear message, interface with customers 2 Focus on culture ... no bureaucracy … best idea wins 3 Staff leadership positions early … drive clarity and accountability 4 No execution disruption x 1,500+ customer meetings to date x 200+ townhalls ... employees engaged x All l
Slide 15: Deal synergies on track
15 Deal synergies on track 2020 target savings $0.4B $0.8B 2020 target savings $0.4B 2020 target savings x Implemented lower logistics rates between legacy BHI and GE O&G x Two supplier summits held … launched $1B+ RFQs packages x Twinza announced … fullstream solutions are real x Sales team enablem
Slide 16: How we work
16 How we work OFS OFE TPS DS Product companies • Business strategy • Integrated operations • New products • Cost management Global functions • Finance • Eng. & Supply Chain • Legal Global Operations • Global Sales • Integrated operations • Regional execution • Key accounts x Integrated projects & s
Slide 17: Capital allocation priorities
Capital allocation priorities … next 12 months 17 Significant opportunity to invest in the business + return capital to shareholders + Strong balance sheet Opportunity to increase leverage + High cash conversion Balanced approach … prioritize highest return alternatives Return capital to shareholder
Slide 18: Executive compensation focused on shareholder value drivers
Executive compensation focused on shareholder value drivers 18 Incentive compensation targets fully aligned with investor priorities Executive compensation philosophy Incentive compensation plan x Majority of pay is performance based x CEO: ~90% variable compensation, ~10% fixed x Named executive of
Slide 19: Financial performance and environment vs. deal announcement
19 x Expecting short cycle businesses to improve in 2H ‘17 x Continued delays in longer - cycle equipment businesses Financials Financial performance Environment vs. deal announcement x ‘17 lower than anticipated at deal signing x Expecting businesses to grow in ’18, however off a lower ‘17 base $31
Slide 20: BHGE … differentiated investment opportunity
BHGE … differentiated investment opportunity 20 • Integrated solutions + digital capability position us extremely well with customers • Broad, diversified portfolio … provides higher earnings stability • Best - in class technology supported by GE Store … differentiator in industry • Strong leadershi
Slide 21: Baker Hughes a GE company
BAKER UGHES a GE company
Baker Hughes a GE — Barclays 2017 CEO Energy - Power Conference on 6ix