PresentationJohn AndersonDirector and Senior North America Oilfield Services & Equipment Analyst So we don't know of too many companies quite like Aspen Aerogels. We often talk about transferable skill sets in energy services, products and services in traditional energy. They now have new emerging markets in new energy. Well, no one has done it quite as well or as quickly as Aspen Aerogels with an established product line in traditional energy that is seeing a step change in revenue as a supplier to EV batt ...

PresentationJohn AndersonDirector and Senior North America Oilfield Services & Equipment Analyst So the word transformational gets thrown around a lot. But my 25 years of covering the sector, no other company has gone through a transformation quite like Baker Hughes. Since the GE Oil & Gas merger in 2017, we've seen Baker Hughes reshape its portfolio around gas infrastructure, deemphasizing upstream with a shift towards production in what I consider to be the hardest feat, creating an entirely new culture a ...

Financial Data and Key Metrics Changes - The company reported total revenue of $628 million for the second quarter, up 5% from the previous quarter and twice the midpoint of the sequential guidance provided in May [11][25] - EBITDA for the quarter was $51 million, marking an 11% sequential increase and representing the best second quarter EBITDA results in the company's public history [10][25] - Gross margins remained resilient at 22.9%, consistent with expectations and better than the full year 2024 average [11][27] - Free cash flow for the quarter was $41 million, with a cash balance of $232 million and no debt [13][14][30] Business Line Data and Key Metrics Changes - U.S. revenue totaled $528 million, an increase of $54 million or 11% sequentially, driven by midstream strength [17][26] - The midstream business grew to approximately 27% of total revenue, more than doubling its contribution over the past six quarters [12] - Canadian revenue was $48 million, down $14 million primarily due to seasonal impacts [20][26] - International revenue was $52 million, down 17% sequentially, in line with guidance due to non-repeating project activity [21][27] Market Data and Key Metrics Changes - U.S. midstream project investments drove strong sequential revenue gains, while upstream production remained disciplined with limited project backlogs [12][18] - The company noted a projected 2% increase in produced water volumes and a 13% increase in produced water recycling volumes for 2025, indicating growth opportunities in water management solutions [20] - The acquisition of Natron International expanded the company's electrical products opportunities in Singapore and the Asia Pacific region [21] Company Strategy and Development Direction - The company is focused on integrating with MRC Global to enhance service offerings and capture growth opportunities in alternative energy, AI infrastructure, and other industrial markets [14][15] - The strategic combination aims to realize $70 million in annual cost synergies within three years post-closing [15] - The company plans to balance organic and inorganic growth while pursuing potential bolt-on acquisitions [23][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds but emphasized solid execution and customer focus as key to success [8][10] - The outlook for the third quarter anticipates relatively flat revenue compared to the second quarter, with expectations of low single-digit percentage growth for the full year [34][36] - Management reaffirmed a target of $150 million in free cash flow for 2025 [36] Other Important Information - The company has a strong balance sheet with zero debt and total liquidity of $582 million [30] - The effective tax rate for the quarter was 21.9%, favorably impacted by tax benefits associated with stock awards [29] Q&A Session Summary Question: What are the most difficult parts of the integration likely to be? - Management emphasized focusing on customer needs and aligning teams early in the integration process to ensure a smooth transition [44] Question: Is it safe to assume the year is heading towards the top half of the current guidance? - Management indicated a bias towards the top end of the guidance but acknowledged potential budget exhaustion in the fourth quarter [46][48] Question: Are there opportunities to drive synergies with vendors and customers? - Management stated that while estimating synergies is ongoing, the focus remains on growth rather than immediate cost reductions [52] Question: Do you expect increased visibility in future earnings power with less exposure to upstream? - Management confirmed that diversification is a key opportunity, allowing for growth in both upstream and other markets [54] Question: How do you think about the impact from tariffs in the back half of the year? - Management noted that while tariffs have increased product costs, most sales growth has come from volume rather than price increases [67] Question: Were there specific factors that drove the outperformance in EBITDA? - Management attributed the improved EBITDA performance primarily to growth in the midstream sector [79]

Financial Data and Key Metrics Changes - Total company revenue for the quarter was $2,500,000,000 with an Adjusted EBITDA of $509,000,000, reflecting a margin of 20.1% when excluding foreign exchange impacts [7][22] - Free cash flow generated was $261,000,000, with total shareholder distributions amounting to $271,000,000 through dividends and share buybacks [7][25] - The total company backlog increased by 5% sequentially to €16,600,000,000 [22] Business Line Data and Key Metrics Changes - In the Subsea segment, revenue was DKK2.2 billion, a 14% increase compared to the first quarter, driven by increased iEPCI project activity in the North Sea and higher installation activity in Brazil [22][23] - Surface Technologies revenue was €318,000,000, a 7% increase from the first quarter, primarily due to higher project and services activity in the Middle East [23][24] - Adjusted EBITDA for Subsea was €483,000,000, up 44% sequentially, with an EBITDA margin of 21.8% [23] Market Data and Key Metrics Changes - In North America, the company has reduced its footprint by 50% over the last three years while improving operating margins and increasing cash flow [10] - International markets now represent nearly two-thirds of Surface Technologies revenue, focusing on core markets with long-term production growth ambitions [10] - Subsea orders achieved $2,600,000,000 in the quarter, with a strong performance in Subsea Services, particularly in greenfield developments [11][12] Company Strategy and Development Direction - The company is focused on transforming its Subsea operations through new commercial models and configurable product offerings, enhancing customer relationships and technology leadership [8][20] - The strategy includes exiting unprofitable markets and consolidating facilities in North America while emphasizing operational efficiency [10] - The company aims to reach a three-year goal of $30,000,000,000 in Subsea inbound by the end of the year, supported by a robust order book [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market challenges and highlighted the importance of strong customer relationships and technology innovation [20] - The outlook for offshore activity remains robust, with significant project sanctioning expected in regions like Guyana and Mozambique [17][19] - The company anticipates continued strength in Subsea revenue growth and an adjusted EBITDA margin similar to the current quarter [25][27] Other Important Information - The company has increased its full-year guidance for total company adjusted EBITDA to approximately $1,800,000,000, a 30% increase compared to the prior year [28] - The company has committed to distributing at least 70% of free cash flow to shareholders, with a current distribution rate of 85% [28] Q&A Session Summary Question: Breakdown of Subsea order book composition - Management confirmed that the strong performance in Subsea Services is a result of successful market strategies and direct awards, indicating a positive trend for the business [31][32] Question: Expectations for awards in the second half - Management indicated that both the Subsea opportunities list and direct awards are expected to contribute to future awards, with confidence in maintaining a robust level of direct awards [34][36] Question: Growth trajectory for services revenue - Management confirmed that services revenue is expected to grow in line with Subsea revenue, with a strong installed base contributing to long-term sustainability [42][44] Question: Insights on brownfield and greenfield project appetite - Management noted a strong commitment to advancing both greenfield and brownfield projects, with significant capital flowing into offshore markets [51][53] Question: Emerging areas for activity outside the Golden Triangle - Management highlighted the importance of regions like East Africa and the Eastern Mediterranean, along with ongoing projects in Brazil and Guyana [61][63] Question: Competitive dynamics in the Middle East - Management emphasized the unique challenges of the Middle East market and the company's focus on technology and high-end services to maintain a competitive edge [70][72] Question: Pricing dynamics in the market - Management clarified that over 80% of their business is direct awarded, which mitigates competitive pricing pressures, focusing instead on project returns and cycle time [88][91] Question: Potential of hybrid flexible pipe technology - Management expressed optimism about the hybrid flexible pipe's applicability across various markets, emphasizing its advantages in weight and installation costs [96][98]

Financial Data and Key Metrics Changes - The second quarter results were in line with expectations despite significant market headwinds, with adjusted EBITDA margins at 21.1%, slightly declining from Q1 [7][11] - Adjusted free cash flow was $79 million, with a free cash flow conversion rate of 31.1%, up from 26.1% in Q1 [21][24] - The company has paid four quarterly dividends of $0.25 per share and repurchased approximately $186 million worth of shares over the past four quarters [11][24] Business Line Data and Key Metrics Changes - North America and Latin America revenues were down sequentially, with North America affected by seasonal spring breakup in Canada and Latin America impacted by Argentina divestitures [9][10] - The ESSR region saw growth due to project startups in Europe, while the Middle East and North Africa region showed noteworthy performance despite a softening market in Saudi Arabia [10][12] - The company expects a decline in revenues for 2025, with North America projected to decline by high single digits and international revenues expected to decline low double to mid double digits [19][28] Market Data and Key Metrics Changes - The overall international market has softened, with increased caution and a slowdown in customer spending due to stable commodity prices and trade discussions causing uncertainty [14][15] - The rig count in Saudi Arabia has declined, affecting the market dynamics, but the company believes it remains underpenetrated in several businesses [36][37] - The U.S. Land market has been challenging, with pricing pressure noted, particularly in the service-related segments [82] Company Strategy and Development Direction - The company is focused on defending margins and maximizing cash generation while adapting to evolving market conditions [29][31] - A multiyear cost optimization program is in place to achieve sustainable productivity gains through technology and lean processes [31] - The company is exploring M&A opportunities, particularly in well construction and production segments, with a focus on value creation through cash flow accretion [73][75] Management's Comments on Operating Environment and Future Outlook - Management anticipates market headwinds will persist for at least another twelve months, with a potential recovery not expected until the second half of 2026 [16][39] - The company has reduced headcount by over 1,500 and lowered annualized personnel expenses by more than $125 million since 2024 [17][18] - Despite challenges, management remains optimistic about the company's future, emphasizing a strong balance sheet and commitment to shareholder returns [30][31] Other Important Information - The company has approximately $1 billion in cash and restricted cash, with total liquidity at $1.3 billion, the highest level since emergence [25][92] - Capital expenditures were $54 million in Q2, down from $77 million in Q1, with expectations for further declines [24][28] - The company is committed to maintaining net working capital efficiency levels at 25% or better [21] Q&A Session Summary Question: Insights on Saudi Arabia's market transition - Management acknowledged the softness in the Saudi market but highlighted the company's underpenetration in several businesses and strong execution [36][37] Question: Clarification on Q4 guidance - Management indicated that the Q4 guidance includes expected seasonal sales and project startups, despite uncertainties due to tariffs [44][46] Question: U.S. Land market challenges - Management noted a steady decline in U.S. Land, with a focus on production products and the impact of tariffs on future performance [51][55] Question: Stability in Mexico's market - Management expressed cautious optimism about stability in Mexico, with expectations for a ramp in activity levels in the second half of the year [60][66] Question: M&A opportunities and balance sheet strategy - Management confirmed a robust pipeline for M&A opportunities, focusing on strategic fits that create value, while maintaining a strong balance sheet [73][75] Question: Pricing pressure in various regions - Management identified North America as experiencing significant pricing pressure, particularly in service businesses, while remaining focused on maintaining margins [82]

2Q 2025 Results July 23, 2025 Copyright 2025 Baker Hughes Company. All rights reserved. The information contained in this document is company confidential and proprietary property of Baker Hughes and its affiliates. It is used only for the benefit of Baker Hughes and may not be distributed, transmitted, reproduced, altered, or used for any purpose without the express written consent of Baker Hughes. Copyright 2025 Baker Hughes Company. All rights reserved. 1 This presentation (and oral statements made regar ...

Core Insights - Baker Hughes reported strong second-quarter results for 2025, with adjusted EBITDA margins increasing by 170 basis points year-over-year to 17.5%, despite a modest decline in revenue [3][4] - The company achieved IET orders totaling $3.5 billion, contributing to a record backlog, and maintained confidence in meeting full-year order guidance [4][6] - Strategic transactions were announced to optimize the portfolio, including a joint venture, a sale of a product line, and an acquisition, aimed at enhancing earnings durability and shareholder value [4][10][11] Financial Performance - Total revenue for the quarter was $6.91 billion, down 3% year-over-year, with net income attributable to Baker Hughes at $701 million, reflecting a 21% increase year-over-year [6][25] - Adjusted net income was $623 million, up 10% year-over-year, and adjusted EBITDA was $1.21 billion, up 7% year-over-year [26][27] - Cash flow from operating activities was $510 million, with free cash flow of $239 million, indicating a 47% decrease from the previous quarter [30][49] Orders and Backlog - Total orders for the quarter reached $7.03 billion, with a book-to-bill ratio of 1.0, while IET's book-to-bill ratio was 1.1 [24][39] - Remaining Performance Obligations (RPO) stood at $34 billion, with IET RPO at $31.3 billion, reflecting a 3% sequential increase [29] Segment Performance - Oilfield Services & Equipment (OFSE) reported orders of $3.5 billion, with revenue of $3.62 billion, down 10% year-over-year [35][36] - Industrial & Energy Technology (IET) saw orders of $3.53 billion and revenue of $3.29 billion, marking a 5% year-over-year increase [37][40] - IET's segment EBITDA increased by 18% year-over-year to $585 million, driven by positive pricing and productivity [41] Strategic Transactions - The company entered a joint venture with Cactus, Inc. for the OFSE Surface Pressure Control product line, valued at approximately $345 million [9] - Baker Hughes sold the Precision Sensors & Instrumentation product line for approximately $1.15 billion, enhancing reinvestment capabilities [10] - The acquisition of Continental Disc Corporation for approximately $540 million aims to strengthen the IET Industrial Products portfolio [11] Technology and Market Developments - Baker Hughes secured significant awards in data center projects, including a contract for 30 NovaLT™ turbines, which will provide up to 500 MW of power [12][15] - The company is expanding its presence in the New Energy sector, with year-to-date bookings totaling $1.25 billion, including a major CCS order [17][40]

Core Viewpoint - Baker Hughes (BKR) is expected to report second-quarter 2025 results on July 22, with indications of a decline in both earnings and revenues compared to the previous year [1][7]. Group 1: Earnings Performance - In the last reported quarter, BKR's adjusted earnings were 51 cents per share, exceeding the Zacks Consensus Estimate of 47 cents, driven by higher demand for natural gas technology and improved EBITDA margins [2]. - The Zacks Consensus Estimate for second-quarter earnings per share is 55 cents, reflecting a 3.5% decline from the prior year's reported figure [2]. - The estimated revenue for the second quarter is $6.6 billion, indicating a 7.1% decline from the year-ago figure [2]. Group 2: Market Conditions - The average WTI spot prices for April, May, and June were $63.54, $62.17, and $68.17 per barrel, respectively, suggesting a favorable pricing environment for exploration and production companies [3]. - The advantageous crude pricing is expected to boost demand for oilfield services, aiding exploration and production players in efficiently managing oil and gas wells [3]. Group 3: Order and Revenue Estimates - The Zacks Consensus Estimate for BKR's total orders is $6.8 billion, down from $7.5 billion reported in the same quarter last year [4]. - Orders from the Oilfield Services & Equipment business are estimated at $3.5 billion, lower than the $4.1 billion reported in the previous year [4]. - Revenue from the Oilfield Services & Equipment segment is projected to decline by 10% year-over-year, which may negatively impact overall results for the upcoming quarter [5][7]. Group 4: Earnings Expectations - The current Earnings ESP for BKR is +3.03%, but the model does not indicate a definitive earnings beat this time [6][8]. - BKR holds a Zacks Rank of 4 (Sell), which suggests a less favorable outlook compared to other stocks in the sector [8].

Financial Data and Key Metrics Changes - Total Q1 revenue was $280 million, up 3% sequentially, with adjusted EBITDA of $94 million, an increase of 1.2% sequentially [9][11] - GAAP net income for Q1 was $54 million, down from $57 million in the previous quarter, primarily due to professional fees incurred at corporate [12] - Adjusted net income and earnings per share were $59 million and $0.73 per share, respectively, compared to $57 million and $0.71 per share in the fourth quarter [12] Business Line Data and Key Metrics Changes - Pressure Control segment revenues were $190 million, up 7.7% sequentially, driven by customer drilling efficiencies [9][10] - Spoolable Technologies segment revenues were $93 million, down 3.6% sequentially due to lower domestic customer activity, partially offset by increased international shipments [10][11] - Operating income for Pressure Control increased by $3.5 million or 6.9% sequentially, while Spoolable Technologies saw a decrease of $1.6 million or 6.5% sequentially [10] Market Data and Key Metrics Changes - International sales in the Spoolable Technologies segment increased by 30% quarter over quarter, driven by robust demand in Canada [22] - The company expects U.S. land drilling activity to decline slightly in the second quarter, with approximately 30 fewer land rigs operating than at the end of Q1 [20] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts by increasing alternative sourcing and ramping up production from its Vietnam facility [16][17] - There is a commitment to international expansion, although no specific updates were provided during the call [26] - The company plans to reduce full-year 2025 net CapEx outlook to a range of $40 million to $50 million while maintaining critical investments [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining profitability despite macroeconomic uncertainties and tariff impacts [27] - The company anticipates a decline in pressure control revenue in Q2 but expects spoolable technologies revenue to increase due to seasonal expansion [20][21] - Management noted that downturns historically create opportunities for new customer acquisition and that they are already seeing such opportunities [90] Other Important Information - The company paid a quarterly dividend of $0.13 per share, resulting in a cash outflow of approximately $11 million [13] - The cash balance at the end of the quarter was $348 million, reflecting a sequential increase of approximately $5 million [13] Q&A Session Summary Question: Transition to Vietnam and cost advantages - Management clarified that Bossier City is not a low-cost operation but offers fast turnaround and robust manufacturing, protecting market share [30] Question: Customer behavior regarding tariffs - Management confirmed that customers have requested to pull forward purchases, but these requests have been denied to maintain fairness among all customers [39] Question: Customer loyalty during downturns - Management indicated that major customers are sticking with the company, emphasizing the importance of supply chain sustainability [42] Question: M&A opportunities in the current environment - Management noted that private equity firms are willing to sell oil field service investments at attractive prices, but the focus remains on the current industry [46] Question: Impact of tariffs on margins - Management acknowledged that there will be some margin compression in the second half of the year due to tariffs, but diversification efforts will help mitigate impacts [68] Question: Ongoing Section 232 investigation - Management expressed that the U.S. lacks adequate steelmaking capacity, which could lead to inflationary pressures [81]

Financial Data and Key Metrics Changes - Solaris generated total revenue of $126 million in Q1 2025, reflecting a 31% increase from the prior quarter [24] - Adjusted EBITDA for the quarter was $47 million, representing a 25% increase from the prior quarter [24] - The average contract tenor for Power Solutions increased to approximately 5.5 years, compared to about 4 years last quarter [20] Business Segment Data and Key Metrics Changes - Power Solutions contributed 55% of total segment adjusted EBITDA and is expected to contribute more than 80% of consolidated adjusted EBITDA after the on-order fleet is deployed [24] - Solaris Logistics experienced a strong first quarter with system activity up over 25% sequentially, benefiting from seasonal rebound and new customer wins [12] - Approximately 75% of locations were equipped with both legacy sand silo systems and top fill systems, effectively doubling earnings potential at the individual wellsite level [13] Market Data and Key Metrics Changes - The company secured an additional 330 megawatts of 16.5 megawatt turbines to meet accelerating market demand, bringing the total expected operating fleet to approximately 1,700 megawatts [18][19] - The average megawatts earning revenue is expected to increase by 13% sequentially to 440 megawatts in Q2 2025 and by 18% to approximately 520 megawatts in Q3 2025 [24] Company Strategy and Development Direction - The company is focused on generating strong free cash flow from its logistics business and reinvesting that cash into the growing Power Solutions business [5] - Solaris aims to maximize shareholder value through growth while maintaining a strong financial profile [17] - The company is working on diversifying its customer base while securing extended contract tenors with existing customers [80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for power solutions, citing ongoing discussions for additional oilfield applications and data center projects [33] - The company anticipates a potential slowdown in oil-directed activity in the second half of the year due to commodity price softness [14] - Management highlighted the importance of co-locating generation on-site for customers to diversify energy sources and control primary and backup power [10] Other Important Information - The company is planning to manufacture certain capital items in-house to reduce costs and enhance returns [28] - Solaris is addressing regulatory challenges by collaborating with customers to select the best available control technology for emissions [16] Q&A Session Summary Question: What is the demand outlook for uncontracted assets? - Management indicated strong demand for uncontracted assets, with ongoing discussions for various applications, including oilfield and data center projects [33] Question: What is the expected EBITDA per megawatt? - Management noted that the dollar per megawatt economics are in line with expectations, with some lumpiness due to ramping up the business [35][36] Question: Will clients be able to attain air permits in a reasonable time? - Management confirmed that the customer is following EPA guidelines and expects to obtain the necessary permits [44] Question: What is the margin profile difference between data center power and other industrial applications? - Management stated that while the pricing is similar, larger jobs in data centers provide a bit more operating leverage, resulting in slightly higher margins [83] Question: How is the company addressing supply chain challenges? - Management acknowledged the tight supply chain but emphasized their ability to secure additional capacity through strong relationships with OEMs [51] Question: What are the end markets for industrial opportunities? - Management highlighted various industrial applications, including metals manufacturing and high-load compressors, as key areas for future growth [101]