Baker Hughes, a GE Company Announces Premerger Baker Hughes Second Quarter Results
- Revenue of
$2.4 billion for the quarter, up 6% sequentially - GAAP net loss per share of
$0.42 for the quarter includes$0.31 per diluted share of adjusting items - Cash flows used in operating activities were
($64) million , an improvement of$99 million sequentially
Revenue for the second quarter of 2017 was
On a GAAP basis, net loss attributable to Baker Hughes for the second
quarter of 2017 was
Adjusted net loss (a non-GAAP measure) for the second quarter of 2017
was
Adjusted EBITDA (a non-GAAP measure) was
Cash flows used in operating activities were
For the quarter, capital expenditures were
Income tax expense was
Corporate costs were
Operating profit before tax for the second quarter of 2017 was
There were no adjusting items to the
Operating profit before tax for the second quarter of 2017 was
There were no adjusting items to the
Operating profit before tax of
There were no adjusting items to the
Operating profit before tax for the second quarter of 2017 was
There were no adjusting items to the
Industrial Services
Industrial Services revenue of
Operating loss before tax for the second quarter of 2017 was
There were no adjusting items to the Industrial Services operating loss in the first quarter of 2017, or the second quarter of 2017.
___________________________________________________________________________________________
Please see Tables 1a and 1b for a reconciliation of GAAP to non-GAAP
financial measures. A reconciliation of net income (loss) attributable
to
Condensed Consolidated Statements of Income (Loss)
| Three Months Ended | ||||||||||||
| June 30, | March 31, | |||||||||||
| (In millions, except per share amounts) | 2017 | 2016 | 2017 | |||||||||
| Revenue | $ | 2,404 | $ | 2,408 | $ | 2,262 | ||||||
| Costs and expenses: | ||||||||||||
| Cost of revenue | 2,084 | 3,112 | 1,888 | |||||||||
| Research and engineering | 102 | 99 | 99 | |||||||||
| Marketing, general and administrative | 225 | 222 | 184 | |||||||||
| Impairment and restructuring charges | — | 1,126 | 90 | |||||||||
| Goodwill impairment | — | 1,841 | — | |||||||||
| Merger and related costs, net | 49 | 78 | 31 | |||||||||
| Merger termination fee | — | (3,500 | ) | — | ||||||||
| Total costs and expenses | 2,460 | 2,978 | 2,292 | |||||||||
| Operating loss | (56 | ) | (570 | ) | (30 | ) | ||||||
| Loss on early extinguishment of debt | — | (142 | ) | — | ||||||||
| Interest expense, net | (30 | ) | (48 | ) | (35 | ) | ||||||
| Loss before income tax and equity in loss of affiliate | (86 | ) | (760 | ) | (65 | ) | ||||||
| Equity in loss of affiliate | (21 | ) | — | (18 | ) | |||||||
| Income tax provision | (72 | ) | (152 | ) | (47 | ) | ||||||
| Net loss | (179 | ) | (912 | ) | (130 | ) | ||||||
| Net loss attributable to noncontrolling interests | — | 1 | 1 | |||||||||
| Net loss attributable to BHGE LLC | $ | (179 | ) | $ | (911 | ) | $ | (129 | ) | |||
| Basic and diluted loss per share attributable to BHGE LLC | $ | (0.42 | ) | $ | (2.08 | ) | $ | (0.30 | ) | |||
| Weighted average shares outstanding, basic and diluted | 429 | 438 | 429 | |||||||||
| Depreciation and amortization expense | $ | 216 | $ | 305 | $ | 218 | ||||||
| Capital expenditures | $ | 129 | $ | 70 | $ | 87 | ||||||
Condensed Consolidated Statements of Income (Loss)
| Six Months Ended June 30, | ||||||||
| (In millions, except per share amounts) | 2017 | 2016 | ||||||
| Revenue | 4,666 | 5,078 | ||||||
| Costs and expenses: | ||||||||
| Cost of revenue | 3,972 | 5,770 | ||||||
| Research and engineering | 201 | 201 | ||||||
| Marketing, general and administrative | 409 | 429 | ||||||
| Impairment and restructuring charges | 90 | 1,286 | ||||||
| Goodwill impairment | — | 1,841 | ||||||
| Merger and related costs, net | 80 | 180 | ||||||
| Merger termination fee | — | (3,500 | ) | |||||
| Total costs and expenses | 4,752 | 6,207 | ||||||
| Operating loss | (86 | ) | (1,129 | ) | ||||
| Loss on early extinguishment of debt | — | (142 | ) | |||||
| Interest expense, net | (65 | ) | (103 | ) | ||||
| Loss before income tax and equity in net loss of affiliate | (151 | ) | (1,374 | ) | ||||
| Equity in net loss of affiliate | (39 | ) | — | |||||
| Income tax provision | (119 | ) | (519 | ) | ||||
| Net loss | (309 | ) | (1,893 | ) | ||||
| Net loss attributable to noncontrolling interests | 1 | 1 | ||||||
| Net loss attributable to BHGE LLC | $ | (308 | ) | $ | (1,892 | ) | ||
| Basic and diluted loss per share attributable to BHGE LLC | (0.72 | ) | (4.30 | ) | ||||
| Weighted average shares outstanding, basic and diluted | 429 | 440 | ||||||
| Depreciation and amortization expense | 434 | 659 | ||||||
| Capital expenditures | 216 | 156 | ||||||
Condensed Consolidated Balance Sheets
| June 30, | December 31, | ||||||
| (In millions) | 2017 | 2016 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 4,133 | $ | 4,572 | |||
|
Accounts receivable - less allowance for doubtful accounts
(2017 - $367, 2016 - $509) |
2,307 | 2,251 | |||||
| Inventories, net | 1,976 | 1,809 | |||||
| Other current assets | 675 | 535 | |||||
| Total current assets | 9,091 | 9,167 | |||||
| Property, plant and equipment, net | 4,047 | 4,271 | |||||
| Goodwill | 4,088 | 4,084 | |||||
| Intangible assets, net | 282 | 318 | |||||
| Other assets | 1,167 | 1,194 | |||||
| Total assets | $ | 18,675 | $ | 19,034 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 1,094 | $ | 1,027 | |||
| Short-term debt and current portion of long-term debt | 331 | 132 | |||||
| Accrued employee compensation | 456 | 566 | |||||
| Other accrued liabilities | 585 | 579 | |||||
| Total current liabilities | 2,466 | 2,304 | |||||
| Long-term debt | 2,678 | 2,886 | |||||
| Deferred income taxes and other tax liabilities | 344 | 328 | |||||
| Long-term liabilities | 800 | 779 | |||||
| Equity | 12,387 | 12,737 | |||||
| Total liabilities and equity | $ | 18,675 | $ | 19,034 | |||
Condensed Consolidated Statements of Cash Flows
| Six Months Ended June 30, | ||||||||
| (In millions) | 2017 | 2016 | ||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (309 | ) | $ | (1,893 | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 434 | 659 | ||||||
| Impairment of assets | 19 | 1,055 | ||||||
| Goodwill impairment | — | 1,841 | ||||||
| Other noncash items | (76 | ) | 1,159 | |||||
| Working capital and other | (295 | ) | 657 | |||||
| Net cash flows (used in) provided by operating activities | (227 | ) | 3,478 | |||||
| Cash flows from investing activities: | ||||||||
| Expenditures for capital assets | (216 | ) | (156 | ) | ||||
| Proceeds from disposal of assets | 134 | 139 | ||||||
| Proceeds from sale of investment securities | 103 | 204 | ||||||
| Purchases of investment securities | (72 | ) | (276 | ) | ||||
| Net cash flows used in investing activities | (51 | ) | (89 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net repayments of short-term debt and other borrowings | (10 | ) | (36 | ) | ||||
| Repayment of long-term debt | — | (1,135 | ) | |||||
| Repurchase of common stock | — | (500 | ) | |||||
| Dividends | (146 | ) | (148 | ) | ||||
| Other | (4 | ) | 14 | |||||
| Net cash flows used in financing activities | (160 | ) | (1,805 | ) | ||||
| Effect of foreign exchange rate changes on cash and cash equivalents | (1 | ) | 2 | |||||
| (Decrease) increase in cash and cash equivalents | (439 | ) | 1,586 | |||||
| Cash and cash equivalents, beginning of period | 4,572 | 2,324 | ||||||
| Cash and cash equivalents, end of period | $ | 4,133 | $ | 3,910 | ||||
Table 1a:Reconciliation of GAAP and Non-GAAP Net Loss
The following table reconciles net loss attributable to
| Three Months Ended | ||||||||||||
| June 30, | March 31, | |||||||||||
| (In millions, except per share amounts) | 2017 | 2016 | 2017 | |||||||||
| Net loss attributable to BHGE LLC (GAAP) | $ | (179 | ) | $ | (911 | ) | $ | (129 | ) | |||
| Identified item: | ||||||||||||
| Impairment and restructuring charges2 | — | 1,126 | 90 | |||||||||
| Goodwill impairment3 | — | 1,841 | — | |||||||||
| Merger and related costs, net4 | 49 | 78 | 31 | |||||||||
| Merger termination fee5 | — | (3,500 | ) | — | ||||||||
| Inventory adjustment6 | — | 621 | — | |||||||||
| Loss on early extinguishment of debt7 | — | 142 | — | |||||||||
| Loss on firm purchase commitment8 | — | (51 | ) | — | ||||||||
| Litigation and other related matters9 | 67 | — | — | |||||||||
| Total identified items | 116 | 257 | 121 | |||||||||
| Income tax on identified items10 | 17 | 262 | (7 | ) | ||||||||
| Identified items, net of income tax | 133 | 519 | 114 | |||||||||
| Adjusted net loss (non-GAAP)1 | $ | (46 | ) | $ | (392 | ) | $ | (15 | ) | |||
| Basic and diluted loss per share attributable to BHGE LLC (GAAP) | $ | (0.42 | ) | $ | (2.08 | ) | $ | (0.30 | ) | |||
| Adjusted basic and diluted loss per share attributable to BHGE LLC (non-GAAP) | $ | (0.11 | ) | $ | (0.90 | ) | $ | (0.04 | ) | |||
| 1 | Adjusted net loss is a non-GAAP measure comprised of net loss attributable to BHGE LLC, excluding the impact of certain identified items. The Company believes that adjusted net loss is useful to investors because it is a consistent measure of the underlying results of the Company’s business. Furthermore, management uses adjusted net loss as a measure of the performance of the Company’s operations. | |
| 2 | Impairment and restructuring charges associated with asset impairments, workforce reductions, facility closures, and contract terminations. | |
| 3 | Goodwill impairment in two of the operating segments: North America for $1,530 million before-tax and Industrial Services for $311 million before-tax. | |
| 4 | Merger and related costs, net recorded in 2017 and 2016. | |
| 5 | Represents the termination fee paid by Halliburton on May 4, 2016, pursuant to the merger agreement. | |
| 6 | Inventory adjustments include costs to write off and dispose of certain excess inventory. | |
| 7 | Loss on early extinguishment of debt associated with the purchase of outstanding bonds of $1 billion of face value. | |
| 8 | Loss on firm commitment was recorded in North America during the first quarter of 2016. In the second quarter of 2016, we reached a settlement with the third party and subsequently reversed this accrual. | |
| 9 | Litigation and other related matters recorded in Corporate during the second quarter of 2017. | |
| 10 | Represents the tax effect of the aggregate identified items, generally based on statutory tax rates, offset by valuation allowances and the benefits of certain tax credits. In the second quarter of 2017, it includes taxes incurred on certain premerger transactions related to the combination with GE Oil & Gas. |
Table 1b:Reconciliation of GAAP and Non-GAAP Financial Measures
The following table reconciles net cash flows provided by operating activities, which is the directly comparable financial result determined in accordance with Generally Accepted Accounting Principles (GAAP), to free cash flow (a non-GAAP financial measure). Free cash flow is defined as net cash flows provided by (used in) operating activities less expenditures for capital assets plus proceeds from disposal of assets. Management is providing this measure because it believes that such measure is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of liquidity. Free cash flow does not represent the residual cash flow available for discretionary expenditures.
| Three Months Ended | ||||||||||||
| June 30, | March 31, | |||||||||||
| (In millions) | 2017 | 2016 | 2017 | |||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (179 | ) | $ | (912 | ) | $ | (130 | ) | |||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||||||
| Depreciation and amortization | 216 | 305 | 218 | |||||||||
| Impairment of assets | — | 937 | 19 | |||||||||
| Goodwill impairment | — | 1,841 | — | |||||||||
| Other noncash items | 11 | 755 | (87 | ) | ||||||||
| Working capital and other | (112 | ) | 651 | (183 | ) | |||||||
| Net cash flows provided by (used in) operating activities (GAAP) | (64 | ) | 3,577 | (163 | ) | |||||||
| Expenditures for capital assets | (129 | ) | (70 | ) | (87 | ) | ||||||
| Proceeds from disposal of assets | 58 | 57 | 76 | |||||||||
| Free cash flow (Non-GAAP) | $ | (135 | ) | $ | 3,564 | $ | (174 | ) | ||||
Table 2:Calculation of EBIT, EBITDA, and Adjusted EBITDA1
| Three Months Ended | ||||||||||||
| June 30, | March 31, | |||||||||||
| (In millions) | 2017 | 2016 | 2017 | |||||||||
| Net loss attributable to BHGE LLC | $ | (179 | ) | $ | (911 | ) | $ | (129 | ) | |||
| Net loss attributable to noncontrolling interests | — | (1 | ) | (1 | ) | |||||||
| Income tax provision | 72 | 152 | 47 | |||||||||
| Equity in loss of affiliate | 21 | — | 18 | |||||||||
| Loss before income tax and equity in loss of affiliate | (86 | ) | (760 | ) | (65 | ) | ||||||
| Interest expense, net | 30 | 48 | 35 | |||||||||
| Loss before interest and taxes (EBIT)1 | (56 | ) | (712 | ) | (30 | ) | ||||||
| Depreciation and amortization expense | 216 | 305 | 218 | |||||||||
|
Earnings (loss) before interest, taxes, depreciation and
amortization (EBITDA)1 |
160 | (407 | ) | 188 | ||||||||
| Adjustments to EBITDA: | ||||||||||||
| Impairment and restructuring charges2 | — | 1,126 | 90 | |||||||||
| Goodwill impairment3 | — | 1,841 | — | |||||||||
| Merger and related costs, net4 | 49 | 78 | 31 | |||||||||
| Merger termination fee5 | — | (3,500 | ) | — | ||||||||
| Inventory adjustments6 | — | 621 | — | |||||||||
| Loss on early extinguishment of debt7 | — | 142 | — | |||||||||
| Loss on firm purchase commitment8 | — | (51 | ) | — | ||||||||
| Litigation and other related matters9 | $ | 67 | $ | — | $ | — | ||||||
| Adjusted EBITDA1 | $ | 276 | $ | (150 | ) | $ | 309 | |||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| (In millions) | 2017 | 2016 | ||||||
| Net loss attributable to BHGE LLC | $ | (308 | ) | $ | (1,892 | ) | ||
| Net loss attributable to noncontrolling interests | (1 | ) | (1 | ) | ||||
| Income tax provision | 119 | 519 | ||||||
| Equity in loss of affiliate | 39 | — | ||||||
| Loss before income tax and equity in loss of affiliate | (151 | ) | (1,374 | ) | ||||
| Interest expense, net | 65 | 103 | ||||||
| Loss before interest and taxes (EBIT)1 | (86 | ) | (1,271 | ) | ||||
| Depreciation and amortization expense | 434 | 659 | ||||||
|
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)1 |
348 | (612 | ) | |||||
| Adjustments to EBITDA: | ||||||||
| Impairment and restructuring charges2 | 90 | 1,286 | ||||||
| Goodwill impairment3 | — | 1,841 | ||||||
| Merger and related costs, net4 | 80 | 180 | ||||||
| Merger termination fee5 | — | (3,500 | ) | |||||
| Inventory adjustments6 | — | 621 | ||||||
| Loss on early extinguishment of debt7 | — | 142 | ||||||
| Litigation and other related matters9 | $ | 67 | $ | — | ||||
| Adjusted EBITDA1 | $ | 585 | $ | (42 | ) | |||
| 1 | EBIT, EBITDA, and Adjusted EBITDA (as defined in the calculations above) are non-GAAP measures. Management is providing these measures because it believes that such measures are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance. | |
| 2 | Impairment and restructuring charges associated with asset impairments, workforce reductions, facility closures, and contract terminations. | |
| 3 | Goodwill impairment in two of the operating segments: North America for $1,530 million before-tax and Industrial Services for $311 million before-tax. | |
| 4 | Merger and related costs, net recorded in 2017 and 2016. | |
| 5 | Represents the termination fee paid by Halliburton on May 4, 2016, pursuant to the merger agreement. | |
| 6 | Inventory adjustments include costs to write off and dispose of certain excess inventory. | |
| 7 | Loss on early extinguishment of debt associated with the purchase of outstanding bonds of $1 billion of face value. | |
| 8 | Loss on firm commitment was recorded in North America during the first quarter of 2016. In the second quarter of 2016, we reached a settlement with the third party and subsequently reversed this accrual. | |
| 9 | Litigation and other related matters recorded in Corporate during the second quarter of 2017. | |
Table 3a:Segment Revenue, Operating Profit (Loss) Before Tax, and Operating Profit Before Tax Margin1
| Three Months Ended | ||||||||||
| June 30, | March 31, | |||||||||
| (In millions) | 2017 | 2016 | 2017 | |||||||
| Segment Revenue | ||||||||||
| North America | $ | 778 | $ | 668 | $ | 712 | ||||
| Latin America | 208 | 235 | 201 | |||||||
| Europe/Africa/Russia Caspian | 504 | 581 | 461 | |||||||
| Middle East/Asia Pacific | 661 | 651 | 661 | |||||||
| Industrial Services | 253 | 273 | 227 | |||||||
| Total Operations | $ | 2,404 | $ | 2,408 | $ | 2,262 | ||||
| Operating Profit (Loss) Before Tax | ||||||||||
| North America | $ | 14 | $ | (311 | ) | $ | (23 | ) | ||
| Latin America | 12 | (243 | ) | 84 | ||||||
| Europe/Africa/Russia Caspian | 15 | (257 | ) | 1 | ||||||
| Middle East/Asia Pacific | 63 | (142 | ) | 72 | ||||||
| Industrial Services | (8 | ) | (43 | ) | (6 | ) | ||||
| Total Operations | 96 | (996 | ) | 128 | ||||||
| Corporate and Other Profit (Loss) Before Tax | ||||||||||
| Corporate | (103 | ) | (29 | ) | (37 | ) | ||||
| Loss on early extinguishment of debt | — | (142 | ) | — | ||||||
| Interest expense, net | (30 | ) | (48 | ) | (35 | ) | ||||
| Impairment and restructuring charges | — | (1,126 | ) | (90 | ) | |||||
| Goodwill impairment | — | (1,841 | ) | — | ||||||
| Merger and related costs, net | (49 | ) | (78 | ) | (31 | ) | ||||
| Merger termination fee | — | 3,500 | — | |||||||
| Corporate, net interest and other | (182 | ) | 236 | (193 | ) | |||||
| Loss Before Income Tax and Equity in Loss of Affiliate | $ | (86 | ) | $ | (760 | ) | $ | (65 | ) | |
| Operating Profit Before Tax Margin1 | ||||||||||
| North America | 1.8 | % | (46.6 | )% | (3.2 | )% | ||||
| Latin America | 5.8 | % | (103.4 | )% | 41.8 | % | ||||
| Europe/Africa/Russia Caspian | 3.0 | % | (44.2 | )% | 0.2 | % | ||||
| Middle East/Asia Pacific | 9.5 | % | (21.8 | )% | 10.9 | % | ||||
| Industrial Services | (3.2 | )% | (15.8 | )% | (2.6 | )% | ||||
| Total Operations | 4.0 | % | (41.4 | )% | 5.7 | % | ||||
| 1 | Operating profit before tax margin is a non-GAAP measure defined as operating profit (loss) before tax divided by revenue. Management uses the operating profit before tax margin because it believes it is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance. | |
Table 3b:Segment Revenue, Operating Profit (Loss) Before Tax, and Operating Profit Before Tax Margin1
| Six Months Ended June 30, | ||||||||
| (In millions) | 2017 | 2016 | ||||||
| Segment Revenue | ||||||||
| North America | $ | 1,490 | $ | 1,487 | ||||
| Latin America | 409 | 512 | ||||||
| Europe/Africa/Russia Caspian | 965 | 1,192 | ||||||
| Middle East/Asia Pacific | 1,322 | 1,369 | ||||||
| Industrial Services | 480 | 518 | ||||||
| Total Operations | $ | 4,666 | $ | 5,078 | ||||
| Operating Profit (Loss) Before Tax | ||||||||
| North America | $ | (9 | ) | (536 | ) | |||
| Latin America | 96 | (309 | ) | |||||
| Europe/Africa/Russia Caspian | 16 | (276 | ) | |||||
| Middle East/Asia Pacific | 135 | (93 | ) | |||||
| Industrial Services | (14 | ) | (47 | ) | ||||
| Total Operations | 224 | (1,261 | ) | |||||
| Corporate and Other Profit (Loss) Before Tax | ||||||||
| Corporate | (140 | ) | (61 | ) | ||||
| Loss on early extinguishment of debt | — | (142 | ) | |||||
| Interest expense, net | (65 | ) | (103 | ) | ||||
| Impairment and restructuring charges | (90 | ) | (1,286 | ) | ||||
| Goodwill impairment | — | (1,841 | ) | |||||
| Merger and related costs, net | (80 | ) | (180 | ) | ||||
| Merger termination fee | — | 3,500 | ||||||
| Corporate, net interest and other | (375 | ) | (113 | ) | ||||
| Loss Before Income Tax and Equity in Loss of Affiliate | $ | (151 | ) | $ | (1,374 | ) | ||
| Operating Profit Before Tax Margin1 | ||||||||
| North America | (0.6 | )% | (36.0 | )% | ||||
| Latin America | 23.5 | % | (60.4 | )% | ||||
| Europe/Africa/Russia Caspian | 1.7 | % | (23.2 | )% | ||||
| Middle East/Asia Pacific | 10.2 | % | (6.8 | )% | ||||
| Industrial Services | (2.9 | )% | (9.1 | )% | ||||
| Total Operations | 4.8 | % | (24.8 | )% | ||||
| 1 | Operating profit before tax margin is a non-GAAP measure defined as operating profit (loss) before tax divided by revenue. Management uses the operating profit before tax margin because it believes it is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance. | |
Table 4:Adjustments to Segment Operating Profit (Loss) Before Tax1
| Three Months Ended | |||||||
| June 30, | June 30, | ||||||
| (In millions) | 20175 | 20162,3 | |||||
| Adjustments to Operating Profit (Loss) Before Tax1 | |||||||
| North America | $ | — | $ | 158 | |||
| Latin America | — | 88 | |||||
| Europe/Africa/Russia Caspian | — | 152 | |||||
| Middle East/Asia Pacific | — | 125 | |||||
| Industrial Services | — | 47 | |||||
| Total Operations | — | 570 | |||||
| Corporate | 67 | — | |||||
| Total | $ | 67 | $ | 570 | |||
| Six Months Ended June 30, | |||||||
| (In millions) | 20174,5 | 20162,3 | |||||
| Adjustments to Operating Profit (Loss) Before Tax1 | |||||||
| North America | $ | — | $ | 209 | |||
| Latin America | — | 88 | |||||
| Europe/Africa/Russia Caspian | — | 152 | |||||
| Middle East/Asia Pacific | — | 125 | |||||
| Industrial Services | — | 47 | |||||
| Total Operations | — | 621 | |||||
| Corporate | 67 | — | |||||
| Total | $ | 67 | $ | 621 | |||
| 1 | The Company believes that adjusting these identified items from the segment operating profit (loss) before tax provides investors and analysts a measure to compare companies more consistently on the basis of operating performance. | |
| 2 | Inventory adjustments to write off and dispose of certain excess inventory. | |
| 3 | Loss on firm commitment was recorded in North America during the first quarter of 2016. In the second quarter of 2016, we reached a settlement with the third party and subsequently reversed this accrual. | |
| 4 | There were no items identified requiring adjustment to our segments in the first quarter of 2017. | |
| 5 | Litigation and other related matters recorded in Corporate during the second quarter of 2017. | |
Table 5a:Supplemental Segment Financial Information Excluding Certain Identified Items
The following table contains non-GAAP measures of adjusted operating profit (loss) before tax and adjusted operating profit before tax margin, which excludes identified items in Table 4:
| Three Months Ended | ||||||||||||
| June 30, | March 31, | |||||||||||
| (In millions) | 2017 | 2016 | 2017 | |||||||||
| Segment Revenue | ||||||||||||
| North America | $ | 778 | $ | 668 | $ | 712 | ||||||
| Latin America | 208 | 235 | 201 | |||||||||
| Europe/Africa/Russia Caspian | 504 | 581 | 461 | |||||||||
| Middle East/Asia Pacific | 661 | 651 | 661 | |||||||||
| Industrial Services | 253 | 273 | 227 | |||||||||
| Total Operations | $ | 2,404 | $ | 2,408 | $ | 2,262 | ||||||
| Adjusted Operating Profit (Loss) Before Tax1 | ||||||||||||
| North America | $ | 14 | $ | (153 | ) | $ | (23 | ) | ||||
| Latin America | 12 | (155 | ) | 84 | ||||||||
| Europe/Africa/Russia Caspian | 15 | (105 | ) | 1 | ||||||||
| Middle East/Asia Pacific | 63 | (17 | ) | 72 | ||||||||
| Industrial Services | (8 | ) | 4 | (6 | ) | |||||||
| Total Operations | 96 | (426 | ) | 128 | ||||||||
| Corporate | (36 | ) | (29 | ) | (37 | ) | ||||||
| Total | $ | 60 | $ | (455 | ) | $ | 91 | |||||
| Adjusted Operating Profit Before Tax Margin1 | ||||||||||||
| North America | 1.8 | % | (22.9 | )% | (3.2 | )% | ||||||
| Latin America | 5.8 | % | (66.0 | )% | 41.8 | % | ||||||
| Europe/Africa/Russia Caspian | 3.0 | % | (18.1 | )% | 0.2 | % | ||||||
| Middle East/Asia Pacific | 9.5 | % | (2.6 | )% | 10.9 | % | ||||||
| Industrial Services | (3.2 | )% | 1.5 | % | (2.6 | )% | ||||||
| Total Operations | 4.0 | % | (17.7 | )% | 5.7 | % | ||||||
| 1 | Adjusted operating profit (loss) before tax is a non-GAAP measure defined as Loss (Profit) Before Income Tax and Equity in Loss of Affiliate less interest expense and identified items as shown on Table 2. Adjusted operating profit before tax margin is a non-GAAP measure defined as adjusted operating profit (loss) before tax divided by revenue. Management uses each of these measures because it believes they are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance and that these measures may be used by investors to make informed investment decisions. | |
Table 5b:Supplemental Segment Financial Information Excluding Certain Identified Items
The following table contains non-GAAP measures of adjusted operating profit (loss) before tax and adjusted operating profit before tax margin, which excludes identified items in Table 4:
| Six Months Ended June 30, | ||||||||
| (In millions) | 2017 | 2016 | ||||||
| Segment Revenue | ||||||||
| North America | $ | 1,490 | $ | 1,487 | ||||
| Latin America | 409 | 512 | ||||||
| Europe/Africa/Russia Caspian | 965 | 1,192 | ||||||
| Middle East/Asia Pacific | 1,322 | 1,369 | ||||||
| Industrial Services | 480 | 518 | ||||||
| Total Operations | $ | 4,666 | $ | 5,078 | ||||
| Adjusted Operating Profit (Loss) Before Tax1 | ||||||||
| North America | $ | (9 | ) | $ | (327 | ) | ||
| Latin America | 96 | (221 | ) | |||||
| Europe/Africa/Russia Caspian | 16 | (124 | ) | |||||
| Middle East/Asia Pacific | 135 | 32 | ||||||
| Industrial Services | (14 | ) | — | |||||
| Total Operations | 224 | (640 | ) | |||||
| Corporate | (73 | ) | (61 | ) | ||||
| Total | $ | 151 | $ | (701 | ) | |||
| Adjusted Operating Profit Before Tax Margin1 | ||||||||
| North America | (0.6 | )% | (22.0 | )% | ||||
| Latin America | 23.5 | % | (43.2 | )% | ||||
| Europe/Africa/Russia Caspian | 1.7 | % | (10.4 | )% | ||||
| Middle East/Asia Pacific | 10.2 | % | 2.3 | % | ||||
| Industrial Services | (2.9 | )% | — | % | ||||
| Total Operations | 4.8 | % | (12.6 | )% | ||||
| 1 | Adjusted operating profit (loss) before tax is a non-GAAP measure defined as Loss (Profit) Before Income Tax and Equity in Loss of Affiliate less interest expense and identified items as shown on Table 2. Adjusted operating profit before tax margin is a non-GAAP measure defined as adjusted operating profit (loss) before tax divided by revenue. Management uses each of these measures because it believes they are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance and that these measures may be used by investors to make informed investment decisions. | |
Supplemental Financial Information
Supplemental financial information can be found on the Company’s website at: www.investors.bhge.com in the Financial Information section under Quarterly Results.
Conference Call and Webcast
As a result of the recent combination with GE Oil & Gas we will not be hosting an earnings conference call or webcast in the second quarter of 2017.
Forward-Looking Statements
This news release (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 statement”). The words “anticipate,” “believe,”
“ensure,” “expect,” “if,” “intend,” “estimate,” “project,” “foresee,”
“forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,”
“potential,” “would,” “may,” “probable,” “likely,” and similar
expressions, and the negative thereof, are intended to identify
forward-looking statements. There are many risks and uncertainties that
could cause actual results to differ materially from our forward-looking
statements. These forward-looking statements are also affected by the
risk factors described in the Company’s Registration Statement on Form
S-4 (File No. 333-216991), filed on
Our expectations regarding our business outlook and business plans; the business plans of our customers; oil and natural gas market conditions; cost and availability of resources; economic, legal and regulatory conditions, and other matters are only our forecasts regarding these matters.
These forward-looking statements, including forecasts, may be substantially different from actual results, which are affected by many risks, along with the following risk factors and the timing of any of these risk factors:
Integration activities - the ability to successfully integrate Baker Hughes with GE Oil & Gas, including operations, technologies, products and services.
Economic and political conditions - the impact of worldwide economic conditions; the effect that declines in credit availability may have on worldwide economic growth and demand for hydrocarbons; foreign currency exchange fluctuations and changes in the capital markets in locations where we operate; and the impact of government disruptions.
Dependence on GE - we will be substantially dependent upon GE, which will be a significant supplier, and any failure by GE to supply us in accordance with applicable contractual terms could have a material effect on our business.
Oil and gas market conditions - the level of petroleum industry
exploration, development and production expenditures; the price of,
volatility in pricing of, and the demand for crude oil and natural gas;
drilling activity; drilling permits for and regulation of the shelf and
the deepwater drilling; excess productive capacity; crude and product
inventories; liquefied natural gas supply and demand; seasonal and other
adverse weather conditions that affect the demand for energy; severe
weather conditions, such as tornadoes and hurricanes, that affect
exploration and production activities;
Terrorism and geopolitical risks - war, military action, terrorist activities or extended periods of international conflict, particularly involving any petroleum-producing or -consuming regions; labor disruptions, civil unrest or security conditions where we operate; potentially burdensome taxation, expropriation of assets by governmental action; cybersecurity risks and cyber incidents or attacks; epidemic outbreaks.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170728005129/en/
Source: Baker Hughes, a GE company
Baker Hughes, a GE company
Investor Contact:
Philipp Mueller,
+1-281-809-9088
investor.relations@bhge.com
or
Media
Contact:
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or
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melanie.kania@bhge.com