BAKER HUGHES GE NET INCOME $70 MLN
BHGE - Baker Hughes, a GE company (NYSE: BHGE) ("BHGE" or the "Company") announced results today for the first quarter of 2018.
- Orders of $5.2 billion for the quarter, down 8% sequentially and up 9% year-over-year on a combined business basis*
- Revenue of $5.4 billion for the quarter, down 7% sequentially and up 1% year-over-year on a combined business basis
- GAAP operating loss of $41 million for the quarter, decreased 63% sequentially and increased unfavorably year-over-year on a combined business basis
- Adjusted operating income (a non-GAAP measure) of $228 million for the quarter, down 20% sequentially and down 19% year-over-year on a combined business basis
- GAAP diluted earnings per share of $0.17 for the quarter which included $(0.08) per share of adjusting items. Adjusted diluted earnings per share (a non-GAAP measure) were $0.09.
- Cash flows generated from operating activities were $294 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was $226 million. Included in free cash flow is a cash usage of $100 million relating to restructuring and merger-related payments.
*On July 3, 2017, we closed our previously announced transaction to combine the Oil & Gas business of General Electric Company ("GE Oil & Gas") and Baker Hughes Incorporated ("Baker Hughes"). The Company presents its financial results in accordance with GAAP which includes the results of Baker Hughes and GE Oil & Gas from the transaction closing date of July 3, 2017. However, management believes that using additional non-GAAP measures on a "Combined Business Basis" will enhance the evaluation of the profitability of the Company and its ongoing operations. Combined business results combine the results of GE Oil & Gas with Baker Hughes as if the closing date had occurred on the first day of all periods presented. The business combination impacts only the Oilfield Services and Digital Solutions segments. Accordingly, no reconciliation is presented for our other segments, Oilfield Equipment and Turbomachinery & Process Solutions. All combined business results presented in this News Release are unaudited. Such combined business results are not prepared in accordance with Article 11 of Regulation S-X. See Exhibit 99.2 in our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 20, 2018, which includes a reconciliation of the combined business information contained herein from financial results prepared in accordance with GAAP.
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Three Months Ended | ||||||||||||||||
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Combined |
Variance | |||||||||||||||
(in millions except per share amounts) |
March 31, |
December 31, |
March 31, |
Sequential |
Year-over- |
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Orders | $ | 5,238 | $ | 5,701 | $ | 4,817 | (8 | )% | 9 | % | |||||||
Revenue | 5,399 | 5,799 | 5,324 | (7 | )% | 1 | % | ||||||||||
Operating income (loss) | (41 | ) | (111 | ) | 39 | 63 | % | U | |||||||||
Adjusted operating income (non-GAAP)* | 228 | 284 | 283 | (20 | )% | (19 | )% | ||||||||||
Net income attributable to BHGE | 70 | 31 | N/A | 126 | % | N/A | |||||||||||
Adjusted net income (non-GAAP) attributable to BHGE* | 38 | 65 | N/A | (42 | )% | N/A | |||||||||||
EPS attributable to Class A shareholders | 0.17 | 0.07 | N/A | 143 | % | N/A | |||||||||||
Adjusted EPS (non-GAAP)* attributable to Class A shareholders | 0.09 | 0.15 | N/A | (40 | )% | N/A | |||||||||||
Cash flow from (used in) operations | 294 | (215 | ) | N/A | F | N/A | |||||||||||
Free cash flow (non-GAAP)* | 226 | (367 | ) | N/A | F | N/A |
*These are non-GAAP financial measures. See section entitled "Charges and Credits" for a reconciliation from GAAP. |
"F" is used in most instances when variance is above 100%. Additionally, "U" is used in most instances when variance is below (100)% |
Prior period information has been restated for the adoption of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and Accounting Standard Update No. 2017-07, Improving the Presentation of Net Periodic Postretirement Benefit Cost, which we adopted on January 1, 2018. |
"We made strong progress in the quarter, securing several key commercial wins, executing on our synergy targets and delivering for our customers. I am pleased with our performance on our priorities of growing share, improving margins and generating cash," said Lorenzo Simonelli, BHGE chairman and chief executive officer.
"In the first quarter, we delivered $5.2 billion in orders and $5.4 billion in revenue. As expected, we saw growth in our shorter-cycle businesses and declines in our longer-cycle businesses versus the previous year. Adjusted operating income* in the quarter was $228 million. Free cash flow* was $226 million.
"Market fundamentals remain supportive, as crude oil prices are relatively rangebound, providing stability to customers as they evaluate projects. The gas market continues to grow, and strong LNG demand supports the view that new capacity will be required in the early to mid-part of the next decade. BHGE is uniquely positioned across the oil and gas value chain, and well placed to benefit from the long-term industry trends.
"In our Oilfield Services (OFS) segment, we continue to focus on growing share in key markets, including North America and the Middle East, through leading technology and services and flawless execution for customers. This quarter, we secured several critical commercial wins, and our synergy efforts led to improved margin rates.
"In our Oilfield Equipment (OFE) segment, we are focused on providing our customers with new commercial models and integrated offerings to enable better outcomes. We continue to expand our leading technology portfolio to drive down total development costs. In the quarter, we announced several deals, demonstrating the strength of our offering.
"In our Turbomachinery & Process Solutions (TPS) segment, we continue to navigate the slowdown in long-cycle projects, but the outlook for LNG is becoming more positive. We are investing in technology to drive differentiation and value for our customers, while positioning the business for growth opportunities. This quarter, we secured key deals in the offshore production and onshore pipeline markets, demonstrating the breadth of our offering across multiple end markets.
"In our Digital Solutions (DS) segment, we are gaining traction with customers on our digital offerings, and our Measurement and Controls businesses are solidifying their positions as technology leaders. In the quarter we launched a new partnership with NVIDIA to expand our capabilities in image recognition and artificial intelligence, and secured key customer wins in both the hardware and software businesses.
"We continue to make progress on the integration. In the first quarter we delivered $144 million of synergies and our 2018 total year commitment of $700 million remains firmly on track.
"Looking forward, the macro outlook is favorable and we remain focused on positioning the Company for further growth and profitability. With our talented and experienced team, leading portfolio and a focus on execution, we are set up to deliver this year and beyond."
Condensed Consolidated and Combined Statements of Income (Loss) |
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(Unaudited) |
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Three Months Ended |
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(In millions, except per share amounts) | 2018 | 2017 | ||||||
Revenue | $ | 5,399 | $ | 3,064 | ||||
Costs and expenses: | ||||||||
Cost of revenue | 4,558 | 2,378 | ||||||
Selling, general and administrative expenses | 674 | 492 | ||||||
Restructuring, impairment and other | 162 | 42 | ||||||
Merger and related costs | 46 | 66 | ||||||
Total costs and expenses | 5,440 | 2,978 | ||||||
Operating income (loss) | (41 | ) | 86 | |||||
Other non operating income, net | 2 | 8 | ||||||
Interest expense, net | (46 | ) | (20 | ) | ||||
Income (loss) before income taxes and equity in loss of affiliate | (85 | ) | 74 | |||||
Equity in loss of affiliate | (20 | ) | — | |||||
Benefit (provision) for income taxes | 86 | (8 | ) | |||||
Net income (loss) | (19 | ) | 66 | |||||
Less: Net income attributable to GE Oil & Gas pre-merger | — | 68 | ||||||
Less: Net loss attributable to noncontrolling interests | (89 | ) | (2 | ) | ||||
Net income attributable to BHGE | $ | 70 | $ | — | ||||
Per share amounts: | ||||||||
Basic earnings per Class A common stock | $ | 0.17 | ||||||
Diluted earnings per Class A common stock | 0.17 | |||||||
Weighted average shares: | ||||||||
Basic | 421 | |||||||
Diluted | 422 | |||||||
Cash dividend per Class A common stock | $ | 0.18 |
Prior period information has been restated for the adoption of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and Accounting Standard Update No. 2017-07, Improving the Presentation of Net Periodic Postretirement Benefit Cost, which we adopted on January 1, 2018. |
Condensed Consolidated and Combined Statements of Financial Position |
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(Unaudited) |
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(In millions) |
March 31, 2018 |
December 31, 2017 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash, cash equivalents and restricted cash (1) | $ | 5,631 | $ | 7,030 | |||
Current receivables, net | 5,865 | 6,015 | |||||
Inventories, net | 4,696 | 4,507 | |||||
All other current assets | 862 | 872 | |||||
Total current assets | 17,054 | 18,424 | |||||
Property, plant and equipment - less accumulated depreciation | 6,593 | 6,959 | |||||
Goodwill | 20,435 | 19,927 | |||||
Other intangible assets, net | 6,203 | 6,358 | |||||
Contract and other deferred assets | 1,931 | 2,044 | |||||
All other assets | 3,005 | 2,788 | |||||
Total assets (1) | $ | 55,221 | $ | 56,500 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,439 | $ | 3,377 | |||
Short-term debt and current portion of long-term debt (1) | 1,176 | 2,037 | |||||
Progress collections and deferred income | 1,676 | 1,775 | |||||
All other current liabilities | 2,034 | 2,038 | |||||
Total current liabilities | 8,325 | 9,227 | |||||
Long-term debt | 6,296 | 6,312 | |||||
Liabilities for pensions and other postretirement benefits | 1,172 | 1,172 | |||||
All other liabilities | 1,333 | 1,379 | |||||
Equity | 38,095 | 38,410 | |||||
Total liabilities and equity | $ | 55,221 | $ | 56,500 |
(1) | Total assets include $992 million and $1,124 million of assets held on behalf of GE, of which $836 million and $997 million is cash and cash equivalents and $156 million and $127 million is investment securities at March 31, 2018 and December 31, 2017, respectively, and a corresponding amount of liability is reported in short term borrowings. | |
Prior period information has been restated for the adoption of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and Accounting Standard Update No. 2017-07, Improving the Presentation of Net Periodic Postretirement Benefit Cost, which we adopted on January 1, 2018. |
Condensed Consolidated and Combined Statements of Cash Flows |
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(Unaudited) |
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Three Months Ended |
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(In millions) | 2018 | 2017 | ||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (19 | ) | $ | 66 | |||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 388 | 132 | ||||||
Working capital and other operating items, net | (75 | ) | (544 | ) | ||||
Net cash flows from (used in) operating activities | 294 | (346 | ) | |||||
Cash flows from investing activities: | ||||||||
Expenditures for capital assets | (177 | ) | (76 | ) | ||||
Proceeds from disposal of assets | 108 | 8 | ||||||
Other investing items, net | (65 | ) | 1 | |||||
Net cash flows used in investing activities | (134 | ) | (67 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayment of long-term debt | (648 | ) | — | |||||
Dividends paid | (76 | ) | — | |||||
Distributions to noncontrolling interest | (127 | ) | — | |||||
Repurchase of Class A common stock | (190 | ) | — | |||||
Repurchase of GE common units by BHGE LLC | (323 | ) | — | |||||
Net transfer from Parent | — | 228 | ||||||
Other financing items, net | (189 | ) | 229 | |||||
Net cash flows from (used in) financing activities | (1,553 | ) | 457 | |||||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | (6 | ) | 2 | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | (1,399 | ) | 46 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 7,030 | 981 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 5,631 | $ | 1,027 |
Prior period information has been restated for the adoption of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and Accounting Standard Update No. 2017-07, Improving the Presentation of Net Periodic Postretirement Benefit Cost, which we adopted on January 1, 2018. |
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Earlier:
2018, April, 16, 09:00:00
U.S. RIGS UP 5 TO 1,008BAKER HUGHES A GE - U.S. Rig Count is up 5 rigs from last week to 1,008, with oil rigs up 7 to 815, gas rigs down 2 to 192, and miscellaneous rigs unchanged at 1. Canada Rig Count is down 9 rigs from last week to 102, with oil rigs down 7 to 41 and gas rigs down 2 to 61.
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2018, April, 6, 18:00:00
WORLDWIDE RIG COUNT DOWN 92 TO 2,179BAKER HUGHES A GE - The worldwide rig count for March 2018 was 2,179, down 92 from the 2,271 counted in February 2018, and up 194 from the 1,985 counted in March 2017.
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2017, October, 23, 11:05:00
BAKER HUGHES NET LOSS $104 BLN“The combination of GE Oil & Gas and Baker Hughes closed on July 3, and we are pleased with our progress during our first operating quarter. Despite the continuing challenging environment, we delivered solid orders growth and secured important wins from customers, advanced existing projects and enhanced our technology offerings in the quarter. We also achieved key integration milestones and made significant progress working as a combined company. I am now more convinced than ever that we combined the right companies at the right time,” said Lorenzo Simonelli, BHGE chairman and chief executive officer.
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2017, July, 5, 12:10:00
GE & BAKER HUGHES DEALGeneral Electric Co. closed its deal to combine its long-suffering energy business with Baker Hughes Inc. on Monday, creating one of the largest companies in the oil-field services industry.
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2017, April, 27, 18:35:00
BAKER HUGHES NET LOSS $129 MLNRevenue for the quarter was $2.3 billion, a decrease of $148 million, or 6%, sequentially. Compared to the same quarter last year, revenue declined $408 million, or 15%. The sequential decrease in revenue was driven primarily by the deconsolidation of the North America onshore pressure pumping business, lower revenue internationally, mainly related to non-recurring year-end product sales, seasonality and price deterioration, and reduced activity in the Gulf of Mexico. This decline was partially offset by activity growth in our North America onshore business, primarily in our well construction product lines.
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2017, January, 26, 18:35:00
BAKER HUGHES NET LOSS $2.7 BLNIn the second half of 2016, we reduced annualized costs by nearly $700 million, exceeding our initial goal by almost 40%, paid down $1 billion in debt, repurchased more than $750 million in shares, accelerated innovation with nearly 70 new product introductions, and built new sales channels for our products and technology.
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2016, October, 31, 18:40:00
GE & BAKER HUGHES: $32 BLN- Combination creates an unparalleled company positioned to deliver value for customers and investors - GE to own 62.5% and Baker Hughes shareholders to own 37.5% of the “New” Baker Hughes - GE to contribute $7.4 billion to fund the $17.50 per share special dividend to existing Baker Hughes shareholders
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2016, May, 5, 18:05:00
HALLIBURTON VS U.S.: SENSELESSLYHalliburton’s chief executive has blamed an increasingly difficult US regulatory climate for the collapse of his company’s $28bn bid for rival Baker Hughes, which was abandoned on Sunday. |