Baker Hughes(BKR) - 2024 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited Q3 2024 financial statements reflect increased revenue and net income, with stable cash flow and growing assets Condensed Consolidated Statements of Income (Loss) Q3 2024 revenue increased 4% to $6.9 billion, with net income rising 48% to $766 million and diluted EPS at $0.77 Consolidated Income Statement Highlights (In Millions, except per share data) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $6,908 | $6,641 | $20,465 | $18,671 | | Operating Income | $930 | $714 | $2,416 | $1,666 | | Net Income Attributable to Baker Hughes | $766 | $518 | $1,800 | $1,503 | | Diluted EPS | $0.77 | $0.51 | $1.80 | $1.48 | - The cash dividend per Class A common stock increased to $0.21 in Q3 2024 from $0.20 in Q3 2023[3] Condensed Consolidated Statements of Financial Position Total assets reached $37.5 billion as of September 30, 2024, with total equity increasing to $16.3 billion Key Financial Position Data (In Millions) | Account | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,664 | $2,646 | | Total current assets | $16,568 | $16,301 | | Total Assets | $37,530 | $36,945 | | Total current liabilities | $12,790 | $12,991 | | Long-term debt | $5,984 | $5,872 | | Total Liabilities | $21,187 | $21,426 | | Total Equity | $16,343 | $15,519 | Condensed Consolidated Statements of Cash Flows Nine-month operating cash flow remained stable at $2.1 billion, with increased cash usage in investing and financing activities Cash Flow Summary (Nine Months Ended Sep 30, In Millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $2,142 | $2,130 | | Net cash used in investing activities | $(799) | $(503) | | Net cash used in financing activities | $(1,293) | $(861) | | Increase in cash and cash equivalents | $18 | $713 | - Key uses of cash in financing activities for the first nine months of 2024 included $628 million in dividends paid and $476 million for the repurchase of Class A common stock[12] Notes to Financial Statements Notes provide detailed disclosures on accounting policies, segment performance, debt, and share repurchases, including $33.4 billion in remaining performance obligations - The company completed its annual goodwill impairment test during the third quarter of 2024 and concluded that the fair value of all reporting units exceeded their carrying value[18] - Total debt was approximately $6.0 billion as of September 30, 2024. The company has a $3.0 billion committed unsecured revolving credit facility, which was undrawn[32][33] - During the first nine months of 2024, the company repurchased 15.0 million shares of Class A common stock for $476 million. Approximately $1.7 billion remained authorized for future repurchases as of September 30, 2024[37] - As of September 30, 2024, the company had $33.4 billion in remaining performance obligations (RPO), with expectations to recognize approximately 61% as revenue within two years[59] Management's Discussion and Analysis (MD&A) Management attributes strong Q3 2024 performance to higher IET volume, positive pricing, and cost initiatives, with a positive outlook for natural gas and LNG - The company maintains a positive outlook for the global natural gas and LNG markets, supported by growing demand for projects across LNG, gas infrastructure, and production[84] - Global upstream spending in 2025 is expected to be similar to 2024, with producers shifting focus towards optimizing mature assets[83] - In Q3 2024, the company returned $361 million to shareholders through dividends and share repurchases, demonstrating a commitment to its capital allocation policy[86] Results of Operations Q3 2024 consolidated revenue increased 4% to $6.9 billion, with operating income up 30% to $930 million, driven by IET growth Q3 2024 vs Q3 2023 Performance (In Millions) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $6,908M | $6,641M | +4% | | Operating Income | $930M | $714M | +30% | Nine Months 2024 vs 2023 Performance (In Millions) | Metric | YTD 2024 | YTD 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $20,465M | $18,671M | +10% | | Operating Income | $2,416M | $1,666M | +45% | Segment Performance Q3 2024 saw OFSE operating income rise to $547 million with a 13.8% margin, and IET revenue grow 9% to $2.9 billion with a 16.1% margin Oilfield Services & Equipment (OFSE) - Q3 Performance (In Millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $3,963M | $3,951M | +$12M | | Operating Income | $547M | $465M | +$83M | | Operating Margin | 13.8% | 11.8% | +2.0 pts | Industrial & Energy Technology (IET) - Q3 Performance (In Millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,945M | $2,691M | +$254M | | Operating Income | $474M | $346M | +$128M | | Operating Margin | 16.1% | 12.9% | +3.2 pts | Liquidity and Capital Resources The company maintains strong liquidity with $2.7 billion cash and an undrawn $3.0 billion credit facility, generating $2.1 billion in operating cash flow - As of September 30, 2024, the company had cash and cash equivalents of $2.7 billion and a fully available $3.0 billion revolving credit facility maturing in November 2028[125][126] Nine-Month Cash Flow Summary (In Millions) | Activity | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Operating Activities | $2,142 | $2,130 | | Investing Activities | $(799) | $(503) | | Financing Activities | $(1,293) | $(861) | - Capital expenditures for 2024 are expected to be up to 5% of annual revenue[136] Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure has not materially changed since the end of fiscal year 2023, as detailed in its 2023 Annual Report - There have been no material changes in the company's market risk exposure since December 31, 2023[145] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[145] - No changes in internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, such controls were identified during the quarter ended September 30, 2024[146] PART II - OTHER INFORMATION Legal Proceedings The company refers to Note 16 of the financial statements and its 2023 Annual Report for details on legal proceedings - For information on legal proceedings, the report directs readers to Note 16 of the Notes to Unaudited Condensed Consolidated Financial Statements[146] Risk Factors The company remains subject to risk factors previously disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report[147] Share Repurchases and Use of Proceeds In Q3 2024, the company repurchased 4.5 million shares for $152 million, with $1.74 billion remaining authorized for future repurchases Share Repurchases - Q3 2024 (In Dollars, except share count) | Period | Total Shares Purchased | Average Price Paid Per Share | Value of Shares Remaining for Repurchase | | :--- | :--- | :--- | :--- | | Q3 2024 Total | 4,520,095 | $33.89 | $1,741,865,699 | - The company's Board of Directors has authorized a total of $4 billion for its share repurchase program, which does not have a specified expiration date[150]