Baker Hughes, a GE company Announces Second Quarter 2019 Results
- Orders of
$6.6 billion for the quarter, up 15% sequentially and up 9% year-over-year - Revenue of
$6.0 billion for the quarter, up 7% sequentially and up 8% year-over-year - GAAP operating income of
$271 million for the quarter, increased 54% sequentially and increased more than three times year-over-year - Adjusted operating income (a non-GAAP measure) of
$361 million for the quarter, up 32% sequentially and up 25% year-over-year* - GAAP diluted earnings per share of
$(0.02) for the quarter which included$0.22 per share of adjusting items. Adjusted diluted earnings per share (a non-GAAP measure) were$0.20* - Cash flows generated from operating activities were
$593 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was$355 million *
*The Company presents its financial results in accordance with GAAP. However, management believes that using additional non-GAAP measures will enhance the evaluation of the profitability of the Company and its ongoing operations. Please see Tables 1a, 1b and 1c for a reconciliation of GAAP to non-GAAP financial measures.
|
|
Three Months Ended |
|
Variance |
|||||||||
|
(in millions except per share amounts) |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||
|
Orders |
$ |
6,554 |
|
$ |
5,693 |
|
$ |
6,036 |
|
|
15% |
9% |
|
Revenue |
5,994 |
|
5,615 |
|
5,548 |
|
|
7% |
8% |
|||
|
Operating income |
271 |
|
176 |
|
78 |
|
|
54% |
F |
|||
|
Adjusted operating income (non-GAAP)* |
361 |
|
273 |
|
289 |
|
|
32% |
25% |
|||
|
Net income (loss) attributable to BHGE |
(9 |
) |
32 |
|
(19 |
) |
|
U |
52% |
|||
|
Adjusted net income (non-GAAP) attributable to BHGE* |
104 |
|
76 |
|
41 |
|
|
37% |
F |
|||
|
EPS attributable to Class A shareholders |
(0.02 |
) |
0.06 |
|
(0.05 |
) |
|
U |
62% |
|||
|
Adjusted EPS (non-GAAP) attributable to Class A shareholders* |
0.20 |
|
0.15 |
|
0.10 |
|
|
37% |
F |
|||
|
Cash flow from operating activities |
593 |
|
(184 |
) |
139 |
|
|
F |
F |
|||
|
Free cash flow (non-GAAP)* |
355 |
|
(419 |
) |
(22 |
) |
|
F |
F |
|||
|
*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)%. |
||||||||||||
“We delivered a solid second quarter 2019 both commercially and operationally. The trends for our longer-cycle businesses remain intact. The
“In the second quarter, we booked
“In Oilfield Services (OFS), we executed on our strategy to grow in key international markets, while in
“In Oilfield Equipment (OFE), we continue to enhance our offerings through Subsea Connect, and we are focused on technology, lowering project costs and delivering for customers. Flexible Pipe System orders were up significantly in the quarter compared to the lows of 2018, a good sign for future revenue growth.
“In Turbomachinery & Process Solutions (TPS), the second quarter saw the acceleration of activity in the LNG market. We have seen approximately 60 Million Tons Per Annum (MTPA) of new capacity reach Final Investment Decision (FID) since the fourth quarter of 2018, and the industry is on track to reach the 100 MTPA we outlined by the end of 2019. Also in the quarter, we delivered strong orders in our on- and offshore production segment, securing important wins in
“In Digital Solutions (DS), we achieved a major milestone in the quarter to strategically position our digital software business. We announced a joint venture with C3.ai, the premier company in the industrial Artificial Intelligence (AI) space. The partnership will help us deliver AI that is faster, easier, and more scalable to drive outcomes for our customers. By integrating our strong digital capabilities and oil and gas industry expertise with C3’s unique AI solutions, we will accelerate the overall digital transformation of this industry.
“In closing, we executed well in the second quarter, and we are encouraged by strengthening international markets and the strong LNG project pipeline. Going forward, we remain focused on our financial priorities and differentiating ourselves to drive higher returns across our portfolio,” concluded Simonelli.
Quarter Highlights
Customer Wins
BHGE’s OFS segment secured new wins and expanded its scope across existing contracts in the quarter as a result of strong performance. In
BHGE’s OFS team also won a multi-year, sole-provider contract for artificial lift in the Gulf of
In
In the Company’s OFE business, BHGE gained traction in its Flexible Pipe Systems product line in the quarter. It secured orders to provide full gas injection, production, water injection and gas lift packages for various pre-salt and post-salt fields in
BHGE’s TPS business won an important contract to provide compression and power generation equipment for the development of an important project in southeast
TPS was also awarded an order to supply a gas turbine-driven generator package for a Floating Production Storage and Offloading system (FPSO) offshore
Technology & Innovation
During the quarter, BHGE’s OFS team successfully deployed its SureCONNECT intelligent downhole system for a large operator in the
The Navi-Drill™ DuraMax™ drilling motor is the latest generation of high-performance positive displacement motors from BHGE. This new motor leverages state-of-the-art research and modeling techniques to deliver the most reliable, efficient and power-optimized motor in the market today. For unconventional applications, the motor provides increased horsepower, torque and durability to drill the curve and lateral in one run and drill extended laterals, saving drilling time and cost for customers. The motor is providing improved efficiency and effectiveness, drilling wells faster and improving well construction productivity for customers across
BHGE recently launched its GeoFORM™ conformable sand management system, which leverages advanced material science to deliver a new approach to sand control- one that expands and conforms to complex well profiles, delivering a new level of sand-control performance with fewer operational requirements.
In the quarter, BHGE’s OFE business officially opened its Subsea Center of Excellence (CoE) in
OFE also signed a memorandum of understanding with Saudi Aramco to create a new facility in the
In DS, BHGE announced the joint venture with C3.ai, whose AI platform is quickly becoming the enterprise standard across a broad range of industries. Using this technology as well as BHGE’s oil and gas domain knowledge and existing digital suite, the companies will deliver C3’s technology to oil and gas customers and collaborate on new AI applications specific for oil and gas outcomes. BHGE will also offer the combined strength of oil and gas and AI expertise directly to customers, deploying teams of data scientists and oilfield experts into customer environments to best leverage the C3 portfolio and deliver AI solutions that meet specific customer needs.
Executing for Customers
The strategic partnership between BHGE and ADNOC Drilling has delivered strong performance since launching operations in January of this year. The teams have mobilized four rigs and drilled more than 100,000 feet with 97% drilling efficiency. On the first eight wells, ADNOC Drilling saved more than 88 days of drilling time. BHGE will continue to work closely with ADNOC Drilling to support ADNOC’s 2030 Smart Growth strategy.
BHGE has delivered substantial progress as part of its integrated well services contract for
In the second quarter, BHGE’s TPS business achieved an important milestone for the Tengizchevroil project, the completion and shipment of the fifth and final power generation module that will generate 130MW of power for the project. Each module is equipped with a Frame 9 gas turbine and is built to operate in extreme conditions. Leveraging BHGE’s modular, plug and play approach enables lower installation costs and minimized risks during start up at the customer site.
Consolidated Results by Reporting Segment*
Consolidated Orders by Reporting Segment
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Consolidated segment orders |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||||
|
Oilfield Services |
$ |
3,266 |
|
$ |
2,997 |
|
$ |
2,866 |
|
|
9 |
% |
14 |
% |
|
Oilfield Equipment |
617 |
|
766 |
|
1,035 |
|
|
(19 |
)% |
(40 |
)% |
|||
|
Turbomachinery & Process Solutions |
1,983 |
|
1,271 |
|
1,498 |
|
|
56 |
% |
32 |
% |
|||
|
Digital Solutions |
688 |
|
659 |
|
637 |
|
|
4 |
% |
8 |
% |
|||
|
Total |
$ |
6,554 |
|
$ |
5,693 |
|
$ |
6,036 |
|
|
15 |
% |
9 |
% |
Orders for the quarter were
Year-over-year, the strong orders growth was driven by Turbomachinery and Process Solutions, Oilfield Services, and Digital Solutions, partially offset by a decline in Oilfield Equipment orders. Year-over-year equipment orders were up 10% and service orders were up 7%.
The Company's total book-to-bill ratio in the quarter was 1.1; the equipment book-to-bill ratio in the quarter was 1.2.
Remaining Performance Obligations (RPO) in the second quarter ended at
Consolidated Revenue by Reporting Segment
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Consolidated segment revenue |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||||
|
Oilfield Services |
$ |
3,263 |
|
$ |
2,986 |
|
$ |
2,884 |
|
|
9 |
% |
13 |
% |
|
Oilfield Equipment |
693 |
|
735 |
|
617 |
|
|
(6 |
)% |
12 |
% |
|||
|
Turbomachinery & Process Solutions |
1,405 |
|
1,302 |
|
1,385 |
|
|
8 |
% |
1 |
% |
|||
|
Digital Solutions |
632 |
|
592 |
|
662 |
|
|
7 |
% |
(5 |
)% |
|||
|
Total |
$ |
5,994 |
|
$ |
5,615 |
|
$ |
5,548 |
|
|
7 |
% |
8 |
% |
Revenue for the quarter was
Compared to the same quarter last year, revenue was up 8%. Oilfield Services was up 13%, Oilfield Equipment was up 12%, Turbomachinery & Process Solutions was up 1%, partially offset by Digital Solutions down 5%.
Consolidated Operating Income (Loss) by Reporting Segment
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Segment operating income (loss) |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||||
|
Oilfield Services |
$ |
233 |
|
$ |
176 |
|
$ |
189 |
|
|
32 |
% |
23 |
% |
|
Oilfield Equipment |
14 |
|
12 |
|
(12 |
) |
|
22 |
% |
F |
|
|||
|
Turbomachinery & Process Solutions |
135 |
|
118 |
|
113 |
|
|
14 |
% |
19 |
% |
|||
|
Digital Solutions |
84 |
|
68 |
|
96 |
|
|
23 |
% |
(13 |
)% |
|||
|
Total segment operating income |
466 |
|
373 |
|
387 |
|
|
25 |
% |
20 |
% |
|||
|
Corporate |
(105 |
) |
(100 |
) |
(98 |
) |
|
(4 |
)% |
(7 |
)% |
|||
|
Inventory impairment |
— |
|
— |
|
(15 |
) |
|
— |
100 |
% |
||||
|
Restructuring, impairment & other charges |
(50 |
) |
(62 |
) |
(146 |
) |
|
22 |
% |
67 |
% |
|||
|
Separation and merger related costs |
(40 |
) |
(34 |
) |
(50 |
) |
|
(20 |
)% |
19 |
% |
|||
|
Operating income |
271 |
|
176 |
|
78 |
|
|
54 |
% |
F |
|
|||
|
Adjusted operating income** |
$ |
361 |
|
$ |
273 |
|
$ |
289 |
|
|
32 |
% |
25 |
% |
|
**Non-GAAP measure (see Table 1a in the 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)%. |
||||||||||||||
On a GAAP basis, operating income for the second quarter of 2019 was
Adjusted operating income (a non-GAAP measure) for the second quarter of 2019 was
Depreciation and amortization for the second quarter of 2019 was
Corporate costs were
Other Financial Items
Income tax expense in the second quarter of 2019 was
Included in other non-operating expense is a
GAAP diluted earnings per share were
Cash flows from operating activities were
Capital expenditures, net of proceeds from disposal of assets, were
Results by Reporting Segment
The following segment discussions and variance explanations are intended to reflect management's view of the relevant comparisons of financial results on a sequential or year-over-year basis, depending on the business dynamics of the reporting segments.
Oilfield Services
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Oilfield Services |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||||
|
Revenue |
$ |
3,263 |
|
$ |
2,986 |
|
$ |
2,884 |
|
|
9 |
% |
13 |
% |
|
Operating income |
$ |
233 |
|
$ |
176 |
|
$ |
189 |
|
|
32 |
% |
23 |
% |
|
Operating income margin |
7.1 |
% |
5.9 |
% |
6.6 |
% |
|
1.2pts |
0.6pts |
|||||
Oilfield Services (OFS) revenue of
Segment operating income before tax for the quarter was
Oilfield Equipment
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Oilfield Equipment |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||||
|
Orders |
$ |
617 |
|
$ |
766 |
|
$ |
1,035 |
|
|
(19 |
)% |
(40 |
)% |
|
Revenue |
$ |
693 |
|
$ |
735 |
|
$ |
617 |
|
|
(6 |
)% |
12 |
% |
|
Operating income (loss) |
$ |
14 |
|
$ |
12 |
|
$ |
(12 |
) |
|
22 |
% |
F |
|
|
Operating income (loss) margin |
2.0 |
% |
1.6 |
% |
(1.9 |
)% |
|
0.5pts |
3.9pts |
|||||
Oilfield Equipment (OFE) orders were down
OFE revenue of
Segment operating income before tax for the quarter was
Turbomachinery & Process Solutions
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Turbomachinery & Process Solutions |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over |
||||||||
|
Orders |
$ |
1,983 |
|
$ |
1,271 |
|
$ |
1,498 |
|
|
56 |
% |
32 |
% |
|
Revenue |
$ |
1,405 |
|
$ |
1,302 |
|
$ |
1,385 |
|
|
8 |
% |
1 |
% |
|
Operating income |
$ |
135 |
|
$ |
118 |
|
$ |
113 |
|
|
14 |
% |
19 |
% |
|
Operating income margin |
9.6 |
% |
9.1 |
% |
8.2 |
% |
|
0.5pts |
1.4pts |
|||||
Turbomachinery & Process Solutions (TPS) orders were up 32% year-over-year. Equipment orders were up 117% driven by higher LNG and
TPS revenue of
Segment operating income before tax for the quarter was
Digital Solutions
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Digital Solutions |
June 30, |
March 31, |
June 30, |
|
Sequential |
Year-over- |
||||||||
|
Orders |
$ |
688 |
|
$ |
659 |
|
$ |
637 |
|
|
4 |
% |
8 |
% |
|
Revenue |
$ |
632 |
|
$ |
592 |
|
$ |
662 |
|
|
7 |
% |
(5 |
)% |
|
Operating income |
$ |
84 |
|
$ |
68 |
|
$ |
96 |
|
|
23 |
% |
(13 |
)% |
|
Operating income margin |
13.2 |
% |
11.5 |
% |
14.6 |
% |
|
1.8pts |
(1.3)pts |
|||||
Digital Solutions (DS) orders were up 8% year-over-year, driven primarily by higher order intake in the Measurement & Sensing and Controls businesses.
DS revenue of
Segment operating income before tax for the quarter was
*Certain columns and rows may not sum up due to the use of rounded numbers.
Charges & Credits*
Table 1a. Reconciliation of GAAP and Adjusted Operating Income
|
|
Three Months Ended |
||||||||
|
(in millions) |
June 30, 2019 |
March 31, 2019 |
June 30, 2018 |
||||||
|
Operating income (GAAP) |
$ |
271 |
|
$ |
176 |
|
$ |
78 |
|
|
Separation, merger & integration related costs |
40 |
|
34 |
|
50 |
|
|||
|
Restructuring & other |
50 |
|
62 |
|
146 |
|
|||
|
Inventory impairment |
— |
|
— |
|
15 |
|
|||
|
Total operating income adjustments |
90 |
|
97 |
|
211 |
|
|||
|
Adjusted operating income (non-GAAP) |
$ |
361 |
|
$ |
273 |
|
$ |
289 |
|
|
Table 1a reconciles operating income, which is the directly comparable financial result determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted operating income (a non-GAAP financial measure). Adjusted operating income excludes the impact of certain identified items. |
Table 1b. Reconciliation of GAAP and Non-GAAP Net Income/(Loss)
|
|
Three Months Ended |
||||||||
|
(in millions, except per share amounts) |
June 30, 2019 |
March 31, 2019 |
June 30, 2018 |
||||||
|
Net income (loss) attributable to BHGE (GAAP) |
$ |
(9 |
) |
$ |
32 |
|
$ |
(19 |
) |
|
Total operating income adjustments (identified items) |
90 |
|
97 |
|
211 |
|
|||
|
Other adjustments (non-operating) (1) |
145 |
|
— |
|
(37 |
) |
|||
|
Tax on total adjustments |
(7 |
) |
(9 |
) |
(14 |
) |
|||
|
Total adjustments, net of income tax |
227 |
|
88 |
|
160 |
|
|||
|
Less: adjustments attributable to noncontrolling interests |
114 |
|
44 |
|
100 |
|
|||
|
Adjustments attributable to BHGE |
113 |
|
44 |
|
60 |
|
|||
|
Adjusted net income attributable to BHGE (non-GAAP) |
$ |
104 |
|
$ |
76 |
|
$ |
41 |
|
|
|
|
|
|
||||||
|
Denominator: |
|
|
|
||||||
|
Weighted-average shares of Class A common stock outstanding diluted |
515 |
|
516 |
|
414 |
|
|||
|
Adjusted earnings per Class A share— diluted (non-GAAP) |
$ |
0.20 |
|
$ |
0.15 |
|
$ |
0.10 |
|
|
(1) |
2Q'19: Primarily includes valuation allowance on business held for sale; 2Q'18: Gain on sale of business. |
|
Table 1b reconciles net income attributable to BHGE, which is the directly comparable financial result determined in accordance with GAAP, to adjusted net income attributable to BHGE (a non-GAAP financial measure). Adjusted net income attributable to BHGE excludes the impact of certain identified items. |
Table 1c. Reconciliation of Cash Flow From Operating Activities to Free Cash Flow
|
|
Three Months Ended |
||||||||
|
(in millions) |
June 30, 2019 |
March 31, 2019 |
June 30, 2018 |
||||||
|
Cash flow from (used in) operating activities (GAAP) |
$ |
593 |
|
$ |
(184 |
) |
$ |
139 |
|
|
Add: cash used in capital expenditures, net of proceeds from disposal of assets |
(238 |
) |
(235 |
) |
(161 |
) |
|||
|
Free cash flow (non-GAAP) |
$ |
355 |
|
$ |
(419 |
) |
$ |
(22 |
) |
|
Table 1c reconciles net cash flows from operating activities, which is the directly comparable financial result determined in accordance with GAAP, to free cash flow (a non-GAAP financial measure). Free cash flow is defined as net cash flows from (used in) operating activities less expenditures for capital assets plus proceeds from disposal of assets. |
|
|
|
Management provides non-GAAP financial measures in Tables 1a, 1b, and 1c because it believes such measures are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance and liquidity, and that these measures may be used by investors to make informed investment decisions. |
|
*Certain columns and rows may not sum up due to the use of rounded numbers. |
|
Financial Tables (GAAP) |
||||||||||||
|
Condensed Consolidated Statements of Income (Loss) |
||||||||||||
|
(Unaudited) |
||||||||||||
|
|
Three Months Ended |
Six Months Ended |
||||||||||
|
(In millions, except per share amounts) |
2019 |
2018 |
2019 |
2018 |
||||||||
|
Revenue |
$ |
5,994 |
|
$ |
5,548 |
|
$ |
11,608 |
|
$ |
10,947 |
|
|
Costs and expenses: |
|
|
|
|
||||||||
|
Cost of revenue |
4,932 |
|
4,612 |
|
9,571 |
|
9,170 |
|
||||
|
Selling, general and administrative expenses |
701 |
|
662 |
|
1,404 |
|
1,336 |
|
||||
|
Restructuring, impairment and other |
50 |
|
146 |
|
112 |
|
308 |
|
||||
|
Separation and merger related costs |
40 |
|
50 |
|
74 |
|
96 |
|
||||
|
Total costs and expenses |
5,723 |
|
5,470 |
|
11,161 |
|
10,910 |
|
||||
|
Operating income |
271 |
|
78 |
|
447 |
|
37 |
|
||||
|
Other non operating income (loss), net |
(131 |
) |
43 |
|
(110 |
) |
45 |
|
||||
|
Interest expense, net |
(56 |
) |
(63 |
) |
(115 |
) |
(109 |
) |
||||
|
Income (loss) before income taxes and equity in loss of affiliate |
84 |
|
58 |
|
222 |
|
(27 |
) |
||||
|
Equity in loss of affiliate |
— |
|
(34 |
) |
— |
|
(54 |
) |
||||
|
Benefit (provision) for income taxes |
(95 |
) |
(62 |
) |
(162 |
) |
24 |
|
||||
|
Net income (loss) |
(11 |
) |
(38 |
) |
60 |
|
(57 |
) |
||||
|
Less: Net income (loss) attributable to noncontrolling interests |
(2 |
) |
(19 |
) |
37 |
|
(108 |
) |
||||
|
Net income (loss) attributable to Baker Hughes, a GE company |
$ |
(9 |
) |
$ |
(19 |
) |
$ |
23 |
|
$ |
51 |
|
|
|
|
|
|
|
||||||||
|
Per share amounts: |
|
|
|
|
||||||||
|
Basic and diluted earnings (loss) per Class A common stock |
$ |
(0.02 |
) |
$ |
(0.05 |
) |
$ |
0.04 |
|
$ |
0.12 |
|
|
|
|
|
|
|
||||||||
|
Weighted average shares: |
|
|
|
|
||||||||
|
Class A basic |
515 |
|
414 |
|
515 |
|
417 |
|
||||
|
Class A diluted |
515 |
|
414 |
|
516 |
|
419 |
|
||||
|
|
|
|
|
|
||||||||
|
Cash dividend per Class A common share |
$ |
0.18 |
|
$ |
0.18 |
|
$ |
0.36 |
|
$ |
0.36 |
|
|
Condensed Consolidated Statements of Financial Position |
||||||
|
(Unaudited) |
||||||
|
(In millions) |
June 30, 2019 |
December 31, 2018 |
||||
|
ASSETS |
||||||
|
Current Assets: |
|
|
||||
|
Cash and cash equivalents (1) |
$ |
3,138 |
|
$ |
3,723 |
|
|
Current receivables, net |
6,310 |
|
5,969 |
|
||
|
Inventories, net |
4,807 |
|
4,620 |
|
||
|
All other current assets |
730 |
|
659 |
|
||
|
Total current assets |
14,985 |
|
14,971 |
|
||
|
Property, plant and equipment, less accumulated depreciation |
6,130 |
|
6,228 |
|
||
|
Goodwill |
20,705 |
|
20,717 |
|
||
|
Other intangible assets, net |
5,510 |
|
5,719 |
|
||
|
Contract and other deferred assets |
1,849 |
|
1,894 |
|
||
|
All other assets |
3,697 |
|
2,910 |
|
||
|
Total assets (1) |
$ |
52,876 |
|
$ |
52,439 |
|
|
LIABILITIES AND EQUITY |
||||||
|
Current Liabilities: |
|
|
||||
|
Accounts payable |
$ |
3,966 |
|
$ |
4,025 |
|
|
Short-term debt and current portion of long-term debt (1) |
892 |
|
942 |
|
||
|
Progress collections and deferred income |
2,214 |
|
1,765 |
|
||
|
All other current liabilities |
2,269 |
|
2,288 |
|
||
|
Total current liabilities |
9,341 |
|
9,020 |
|
||
|
Long-term debt |
6,256 |
|
6,285 |
|
||
|
Liabilities for pensions and other employee benefits |
997 |
|
1,018 |
|
||
|
All other liabilities |
1,501 |
|
1,103 |
|
||
|
Equity |
34,781 |
|
35,013 |
|
||
|
Total liabilities and equity |
$ |
52,876 |
|
$ |
52,439 |
|
|
(1) |
Total assets include $856 million and $896 million of assets held on behalf of GE, of which $739 million and $747 million is cash and cash equivalents and $117 million and $149 million is investment securities at June 30, 2019 and December 31, 2018, respectively, and a corresponding amount of liability is reported in short-term borrowings. |
|
Condensed Consolidated Statements of Cash Flows |
||||||
|
(Unaudited) |
||||||
|
|
Six Months Ended |
|||||
|
(In millions) |
2019 |
2018 |
||||
|
Cash flows from operating activities: |
|
|
||||
|
Net income (loss) |
$ |
60 |
|
$ |
(57 |
) |
|
Adjustments to reconcile net income (loss) to net cash flows from operating activities: |
|
|
||||
|
Depreciation and amortization |
709 |
|
780 |
|
||
|
Valuation allowance on disposal group |
136 |
|
— |
|
||
|
Working capital and other operating items, net |
(496 |
) |
(290 |
) |
||
|
Net cash flows from operating activities |
409 |
|
433 |
|
||
|
Cash flows from investing activities: |
|
|
||||
|
Expenditures for capital assets, net of proceeds from disposal of assets |
(473 |
) |
(230 |
) |
||
|
Net cash paid for business interests |
(69 |
) |
— |
|
||
|
Other investing items, net |
(21 |
) |
68 |
|
||
|
Net cash flows used in investing activities |
(563 |
) |
(162 |
) |
||
|
Cash flows from financing activities: |
|
|
||||
|
Repayment of long-term debt |
(25 |
) |
(648 |
) |
||
|
Dividends paid |
(185 |
) |
(150 |
) |
||
|
Distributions to noncontrolling interest |
(188 |
) |
(253 |
) |
||
|
Repurchase of Class A common stock |
— |
|
(387 |
) |
||
|
Repurchase of common units from GE by BHGE LLC |
— |
|
(638 |
) |
||
|
Other financing items, net |
(29 |
) |
(296 |
) |
||
|
Net cash flows used in financing activities |
(427 |
) |
(2,372 |
) |
||
|
Effect of currency exchange rate changes on cash and cash equivalents |
(4 |
) |
(50 |
) |
||
|
Decrease in cash and cash equivalents |
(585 |
) |
(2,151 |
) |
||
|
Cash and cash equivalents, beginning of period |
3,723 |
|
7,030 |
|
||
|
Cash and cash equivalents, end of period |
$ |
3,138 |
|
$ |
4,879 |
|
Supplemental Financial Information
Supplemental financial information can be found on the Company’s website at: investors.bhge.com in the Financial Information section under Quarterly Results.
Conference Call and Webcast
The Company has scheduled an investor conference call to discuss management’s outlook and the results reported in today’s earnings announcement. The call will begin at
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 annual report on Form 10-K for the annual period ended
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 and separation activities - the ability to successfully integrate Baker Hughes with GE Oil & Gas, including operations, technologies, products and services; and at the same time, reduce and / or eliminate our dependencies on GE.
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 - any failure by GE to supply products and services to us in accordance with applicable contractual terms could have a material effect on our business.
Orders and RPO - our ability to execute on orders and RPO in accordance with agreed specifications, terms and conditions and convert those orders and RPO to revenue and cash.
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 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: https://www.businesswire.com/news/home/20190731005322/en/
Source: Baker Hughes, a GE company
Investor Contact:
Philipp Mueller, +1 281 809 9088, investor.relations@bhge.com
Media Contact:
Stephanie Cathcart, +1 202 549 6462, stephanie.cathcart@bhge.com
Melanie Kania, +1 713 439 8303, melanie.kania@bhge.com