Baker Hughes Reports Q2 Results Above Street Expectations

Baker Hughes Co BKR reported a second-quarter FY23 revenue increase of 25.1% year-over-year to $6.32 billion, beating the consensus of $6.26 billion.

Orders grew by 28% Y/Y to $7.5 billion, driven by an increase in IET and OFSE segments.

Adjusted EPS was $0.39, beating the consensus of $0.33.

Industrial & Energy Technology revenue increased 33% Y/Y to $2.44 billion; operating margin contracted by 20 bps to 12.8%; and EBITDA margin was 14.9%, down 80 bps.

Oilfield Services & Equipment revenue grew 20% Y/Y to $3.88 billion; operating margin expanded by 310 bps to 10.8%; and EBITDA margin was 16.4%, up by 190 bps.

Adjusted EBITDA of $907 million (+39.3% Y/Y); the margin was 14.4%, up 146 bps.

The adjusted operating income was $631 million (+67.8% Y/Y), and the margin expanded by 254 bps to 10%.

BKR's operating cash flow year-to-date stood at $1.32 billion, compared to $393 million a year ago. 

Operating cash flow for the quarter stood at $858 million, and the Free cash flow was $623 million.

Baker Hughes chairman and chief executive officer Lorenzo Simonelli commented: "Growing economic uncertainty continues to drive commodity price volatility globally. However, despite lower oil prices over the first half of the year, we maintain a constructive outlook for global upstream spending in 2023. Market softness in North America is expected to be more than offset by strength in international and offshore markets." 

"Outside of the upstream markets, we remain confident on the LNG outlook, with solid demand growth this year led by Europe and Asia. Based on the continued development of the LNG project pipeline, we still expect the market to exceed 65 million tons per annum (MTPA) of FIDs this year and should see a similar level of activity in 2024," Simonelli added.

3Q23 Outlook: BKR expects revenue of $6.4 billion-$6.5 billion versus $6.48 billion consensus and Adj. EBITDA of $930 million-$990 million.

FY23 Outlook: The company sees revenue of $24.8 billion-$26 billion, versus $25.3 billion consensus and Adj. EBITDA of $3.65 billion-$3.8 billion.

Price Action: BKR shares are trading higher by 0.97% at $35.38 on the last check Wednesday.