- Orders of $6.7 billion for the quarter, up 24% sequentially and
up 28% year-over-year
- Revenue of $5.5 billion for the quarter, up 8% sequentially and
flat year-over-year
- GAAP operating income of $574 million for the quarter, up 52%
sequentially and favorable year-over-year
- Adjusted operating income (a non-GAAP measure) of $571 million
for the quarter, up 42% sequentially and up 23% year-over-year
- Adjusted EBITDA* (a non-GAAP measure) of $844 million for the
quarter was up 27% sequentially and up 10% year-over-year
- GAAP diluted earnings per share of $0.32 for the quarter which
included $(0.08) per share of adjusting items. Adjusted diluted
earnings per share (a non-GAAP measure) were $0.25.
- Cash flows generated from operating activities were $773
million for the quarter. Free cash flow (a non-GAAP measure) for
the quarter was $645 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 reconciliations in
the section entitled "Reconciliation of GAAP to non-GAAP Financial
Measures." Certain columns and rows in our tables and financial
statements may not sum up due to the use of rounded numbers.
*Adjusted EBITDA (a non-GAAP measure) is defined as operating
income (loss) excluding depreciation & amortization and
operating income adjustments.
Baker Hughes Company (Nasdaq: BKR) ("Baker Hughes" or the
"Company") announced results today for the fourth quarter and total
year 2021.
Three Months Ended
Variance
(in millions except per share amounts)
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over
year
Orders
$
6,656
$
5,378
$
5,188
24
%
28
%
Revenue
5,519
5,093
5,495
8
%
—
%
Operating income
574
378
182
52
%
F
Adjusted operating income (non-GAAP)
571
402
462
42
%
23
%
Adjusted EBITDA (non-GAAP)
844
664
770
27
%
10
%
Net income attributable to Baker
Hughes
294
8
653
F
(55
)%
Adjusted net income (loss) (non-GAAP)
attributable to Baker Hughes
224
141
(50
)
59
%
F
Diluted EPS attributable to Class A
shareholders
0.32
0.01
0.91
F
(64
)%
Adjusted diluted EPS (non-GAAP)
attributable to Class A shareholders
0.25
0.16
(0.07
)
50
%
F
Cash flow from operating activities
773
416
378
86
%
F
Free cash flow (non-GAAP)
645
305
250
F
F
"F" is used in most instances when
variance is above 100%. Additionally, "U" is used in most instances
when variance is below (100)%.
“We are pleased with our fourth quarter results as we generated
another quarter of strong free cash flow, solid margin rate
improvement, and strong orders from TPS. For the full year, we were
pleased with our performance and took several important steps to
accelerate our strategy and help position the Company for the
future. Overall, 2021 proved to be successful on many fronts for
Baker Hughes, with key commercial successes and developments in the
LNG and new energy markets, as well as record cash flow from
operations and free cash flow, and peer-leading capital allocation.
I would like to thank our employees for their hard work and
commitment to achieve our goals, deliver for our customers and move
the Company forward,” said Lorenzo Simonelli, Baker Hughes chairman
and chief executive officer.
“As we look ahead to 2022, we expect the pace of global economic
growth to remain strong although slightly moderate compared to
2021. We believe the broader macro recovery should translate into
rising energy demand for 2022 and relatively tight supplies for oil
and natural gas, providing an attractive investment environment for
our customers and a strong tailwind for many of our product
companies."
“We are very excited with the strategic direction of Baker
Hughes and believe the Company is well-positioned to capitalize on
near-term cyclical recovery and for long-term change in the energy
and industrial markets. We look forward to another year of
supporting our customers, continuing to advance our strategy, and
delivering for shareholders in 2022,” concluded Simonelli.
Quarter Highlights
Supporting our Customers
OFS secured a contract with LUKOIL to begin developing 14
offshore wells in the Baltic Sea’s D33 field. The contract will
feature the first-ever combined deployment of Baker Hughes’
electrical submersible pumps (ESP) and LUKOIL’s Permanent Magnet
Motors (PMM) since the two companies announced a collaboration on
energy efficient technologies in June 2021. Baker Hughes’ ESP
technology has unsurpassed levels of efficiency, reliability, and
performance, while LUKOIL’s PMM technology enables a 15-20%
reduction in energy consumption compared to current artificial lift
processes.
OFS also secured a two-year contract for technology and services
for a major operator in the Permian Basin. The contract combines
best-in-class technology and services from the Artificial Lift,
Oilfield & Industrial Chemicals, and Reservoir Technical
Services product lines, including the CENesis PHASE Artificial Lift
system, which optimizes production, extends asset life, increases
personnel safety, lowers lifting costs and reduces environmental
footprint.
The TPS segment continued to maintain its LNG leadership. TPS
secured a major contract from Bechtel to provide high-efficiency
gas turbines and centrifugal compressors to support the expansion
of the Pluto LNG onshore processing facility in Australia, which is
operated by Woodside. The contract will provide six LM6000PF+
aeroderivative gas turbines, 14 centrifugal compressors and
additional equipment for Pluto LNG’s second train, leading to an
additional expected capacity of approximately 5 million tons per
annum (MTPA) and helping to maximize efficiency and flexibility
while lowering greenhouse gas emissions.
TPS secured a contract with NOVATEK PAO to provide advanced
turbomachinery equipment for a feed gas boosting station in Russia.
TPS will provide five turbo-compressors, driven by Frame 5/2D gas
turbines, to support the facility, stabilizing the pressure and
flow rate of feed gas to maintain maximum carrying capacity. Baker
Hughes and NOVATEK have a long history of collaboration, and TPS’
gas turbines have operated successfully at NOVATEK's projects since
2017.
OFE secured a major 10-year contract from Abu Dhabi National Oil
Company (ADNOC) for the Surface Pressure Control (SPC) product line
to manufacture, supply, store, and service surface wellheads and
tree systems. The contract includes ADNOC’s onshore and offshore
fields in the UAE as well as a long-term service contract to cover
repair, maintenance and spares for the project’s equipment.
The DS segment continued to gain traction in multiple industrial
end markets, particularly in the automotive and electronics
sectors. The Waygate Technologies product line continued to lead in
market share for industrial computed tomography (CT) systems,
achieving record revenue in the fourth quarter for battery
inspection and securing contracts with major electric vehicle
manufacturers and battery suppliers in Europe and Asia.
Executing on Priorities
Baker Hughes and Shell signed a broad strategic collaboration
agreement to accelerate the global energy transition. Shell will
provide select Baker Hughes sites in the U.S. with power and
renewable energy credits, as well as negotiate renewable power for
Baker Hughes sites in Europe and Singapore. The two companies will
also identify opportunities to accelerate each other’s transition
to net-zero carbon emissions by 2050, such as Baker Hughes
providing low-carbon solutions for Shell’s LNG fleet through
technology upgrades and compressor re-bundles. Baker Hughes will
also help Shell develop digital solutions to accelerate
decarbonization across Shell’s global assets and operations. The
two companies will also explore potential opportunities to
co-invest and participate in new models to decarbonize the energy
and industrial sectors.
Baker Hughes saw continued customer interest in carbon capture,
utilization and storage (CCUS) applications. TPS secured a contract
with Santos, a leading natural gas producer in Australia, to supply
turbomachinery equipment for the Moomba CCS project, which will
serve a gas processing plant and permanently store 1.7 million tons
of carbon dioxide (CO2) annually. The equipment scope includes
PGT25+G4 aeroderivative gas turbine, MCL compressor, and PCL
compressor technologies to compress CO2 captured at Moomba CCS for
transportation and subsequent injection for storage.
TPS continued to support the growth of the hydrogen economy,
securing a contract with Air Products to supply advanced
compression technology for the NEOM carbon-free hydrogen project in
the Kingdom of Saudi Arabia. The contract follows the two
companies’ hydrogen collaboration agreement announced in
mid-2021.
Baker Hughes announced an approximately 20% investment in Ekona
Power Inc, a growth stage company developing novel hydrogen
production technology. The two companies have joined efforts to
accelerate the scale up and industrialization of the technology by
identifying suitable pilot projects and leveraging Baker Hughes’
leading turbomachinery portfolio as well as established technical
expertise in providing modular and scalable solutions for global
hydrogen and natural gas projects. Baker Hughes has also assumed a
seat on Ekona’s Board of Directors.
DS continued to secure important contracts with key energy and
industrial customers for condition monitoring and industrial asset
management solutions. The Bently Nevada product line secured a
contract with a major oil company to deploy System 1 asset
management software as a standardized platform for enterprise-wide
condition monitoring across 28 facilities worldwide. In addition,
Bently Nevada secured a five-year service agreement for a major
customer in the mining segment to provide asset strategy consulting
services and support the customer’s digital transformation to help
increase production and improve equipment reliability.
Bently Nevada also secured a contract with Yara, one of the
world’s leading fertilizer companies, to enable digital
transformation and improve asset reliability and efficiency. The
enterprise-wide contract will enable data availability between
Yara’s plant operations and the cloud across 23 sites using Bently
Nevada’s latest System 1 asset management software, accompanied by
a maintenance, support and services agreement.
Baker Hughes continued to invest in industrial asset management
capabilities, announcing an investment and multi-year commercial
alliance with Augury, a machine health solution provider, to
deliver an expanded integrated asset performance management
solution through Bently Nevada. Through the alliance, customers
will benefit from end-to-end visibility into the health and
performance of critical assets and the entire balance of plant,
leading to reduced downtime, increased availability and lower
maintenance costs.
Leading with Innovation
The BakerHughesC3.ai joint venture alliance (BHC3) secured
several key contracts with oil & gas customers to deploy
AI-based applications and accelerate digital transformation. In the
Middle East, BHC3 and TPS secured a contract to deploy the BHC3™
Reliability application for LNG facilities and will deliver
predictive insights at scale. The application will be deployed on
the Microsoft Azure cloud platform and integrate with the Baker
Hughes iCenter software to improve maintenance planning of critical
industrial equipment and expand on the customer’s current
monitoring services across its installed turbomachinery
equipment.
The Druck product line in DS also saw increased demand for its
pressure measurement technologies for the electronic component and
semiconductor manufacturing sectors, including a significant
contract with a major Asian semiconductor supplier. To support the
sector’s rapid growth, Druck has also commercialized and improved
the world’s fastest pressure controller, the PACE CM3, allowing
customers to have greater flexibility, accuracy, speed and
stability in pressure measurement.
Consolidated Results by Reporting
Segment
Consolidated Orders by Reporting Segment
(in millions)
Three Months Ended
Variance
Consolidated segment orders
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Oilfield Services
$
2,567
$
2,412
$
2,266
6
%
13
%
Oilfield Equipment
510
724
561
(30
) %
(9
) %
Turbomachinery & Process Solutions
2,974
1,719
1,832
73
%
62
%
Digital Solutions
605
523
528
16
%
14
%
Total
$
6,656
$
5,378
$
5,188
24
%
28
%
Orders for the quarter were $6,656 million, up 24% sequentially
and up 28% year-over-year. The sequential increase was a result of
higher order intake in Turbomachinery & Process Solutions,
Digital Solutions, and Oilfield Services, partially offset by lower
orders in Oilfield Equipment. Equipment orders were up 38%
sequentially and service orders were up 12%.
Year-over-year, the increase in orders was a result of higher
order intake in Turbomachinery & Process Solutions, Digital
Solutions, and Oilfield Services, partially offset by lower orders
in Oilfield Equipment. Year-over-year equipment orders were up 42%
and service orders were up 17%.
The Company's total book-to-bill ratio in the quarter was 1.2;
the equipment book-to-bill ratio in the quarter was 1.4.
Remaining Performance Obligations (RPO) in the fourth quarter
ended at $23.6 billion, an increase of $0.1 billion from the third
quarter of 2021. Equipment RPO was $8.2 billion, up 9%
sequentially. Services RPO was $15.3 billion, down 4%
sequentially.
Consolidated Revenue by Reporting Segment
(in millions)
Three Months Ended
Variance
Consolidated segment revenue
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Oilfield Services
$
2,566
$
2,419
$
2,282
6
%
12
%
Oilfield Equipment
619
603
712
3
%
(13
) %
Turbomachinery & Process Solutions
1,776
1,562
1,946
14
%
(9
) %
Digital Solutions
558
510
556
9
%
—
%
Total
$
5,519
$
5,093
$
5,495
8
%
—
%
Revenue for the quarter was $5,519 million, an increase of 8%,
sequentially. The increase was driven by higher volume across all
four segments.
Compared to the same quarter last year, revenue was flat, driven
by higher volume in Oilfield Services, offset by Oilfield Equipment
and Turbomachinery & Process Solutions.
Consolidated Operating Income by Reporting Segment
(in millions)
Three Months Ended
Variance
Segment operating income
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Oilfield Services
$
256
$
190
$
142
35
%
81
%
Oilfield Equipment
23
14
23
68
%
1
%
Turbomachinery & Process Solutions
346
278
332
24
%
4
%
Digital Solutions
51
26
76
97
%
(33
) %
Total segment operating income
676
508
573
33
%
18
%
Corporate
(106
)
(105
)
(111
)
—
%
5
%
Inventory impairment
—
—
(27
)
—
%
F
Restructuring, impairment & other
11
(14
)
(229
)
F
F
Separation related
(8
)
(11
)
(24
)
27
%
67
%
Operating income
574
378
182
52
%
F
Adjusted operating income*
571
402
462
42
%
23
%
Depreciation and amortization
273
262
307
4
%
(11
) %
Adjusted EBITDA*
$
844
$
664
$
770
27
%
10
%
*Non-GAAP measure.
"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 fourth quarter of 2021
was $574 million. Operating income increased $196 million
sequentially and increased $393 million year-over-year. Total
segment operating income was $676 million for the fourth quarter of
2021, up 33% sequentially and up 18% year-over-year.
Adjusted operating income (a non-GAAP measure) for the fourth
quarter of 2021 was $571 million, which excludes adjustments
totaling $3 million before tax, mainly related to restructuring and
separation activities. A complete list of the adjusting items and
associated reconciliation from GAAP has been provided in Table 1a
in the section entitled “Reconciliation of GAAP to non-GAAP
Financial Measures.” Adjusted operating income for the fourth
quarter of 2021 was up 42% sequentially, driven by higher volume
and margin expansion across all segments. Adjusted operating income
was up 23% year-over-year driven by margin expansion in Oilfield
Services, Turbomachinery and Process Solutions, and Oilfield
Equipment, partially offset by margin contraction in Digital
Solutions.
Depreciation and amortization for the fourth quarter of 2021 was
$273 million.
Adjusted EBITDA (a non-GAAP measure) for the fourth quarter of
2021 was $844 million which excludes adjustments totaling $3
million before tax, mainly related to restructuring and separation
related activities. Adjusted EBITDA for the fourth quarter was up
27% sequentially and up 10% year-over-year.
Corporate costs were $106 million in the fourth quarter of 2021,
flat sequentially and down 5% year-over-year.
Other Financial Items
Income tax expense in the fourth quarter of 2021 was $352
million. Income tax expense includes $103 million in charges that
are recoverable as they related to liabilities indemnified under
the Tax Matters Agreement with General Electric. These tax charges
have an offsetting income in the other non-operating income line of
our income statement.
Other non-operating income in the fourth quarter of 2021 was
$208 million. Included in other non-operating income are gains from
the change in fair value of our investment in ADNOC Drilling, and
losses from the change in fair value of our investment in C3
AI.
GAAP diluted earnings per share was $0.32. Adjusted earnings per
share was $0.25. Excluded from adjusted earnings per share were all
items listed in Table 1a in the section entitled "Reconciliation of
GAAP to non-GAAP Financial Measures" as well as the "other
adjustments (non-operating)" found in Table 1c.
Cash flows generated from operating activities were $773 million
for the fourth quarter of 2021. Free cash flow (a non-GAAP measure)
for the quarter was $645 million. A reconciliation from GAAP has
been provided in Table 1d in the section entitled "Reconciliation
of GAAP to non-GAAP Financial Measures."
Capital expenditures, net of proceeds from disposal of assets,
were $129 million for the fourth quarter of 2021.
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
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Revenue
$
2,566
$
2,419
$
2,282
6
%
12
%
Operating income
$
256
$
190
$
142
35
%
81
%
Operating income margin
10.0
%
7.9
%
6.2
%
2.1
pts
3.8
pts
Depreciation & amortization
$
193
$
183
$
211
5
%
(9
) %
EBITDA*
$
449
$
373
$
353
20
%
27
%
EBITDA margin*
17.5
%
15.4
%
15.5
%
2.1
pts
2
pts
Oilfield Services (OFS) revenue of $2,566 million for the fourth
quarter increased by $147 million, or 6%, sequentially.
North America revenue was $742 million, up 4% sequentially.
International revenue was $1,824 million, an increase of 7%
sequentially, led by increases in Sub-Saharan Africa, the North
Sea, Russia, Latin America and the Middle East.
Segment operating income before tax for the quarter was $256
million. Operating income for the fourth quarter of 2021 was up $66
million, or 35%, sequentially, driven by higher volume, price, mix
and cost productivity.
Oilfield Equipment
(in millions)
Three Months Ended
Variance
Oilfield Equipment
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Orders
$
510
$
724
$
561
(30
) %
(9
) %
Revenue
$
619
$
603
$
712
3
%
(13
) %
Operating income
$
23
$
14
$
23
68
%
1
%
Operating income margin
3.8
%
2.3
%
3.2
%
1.5
pts
0.5
pts
Depreciation & amortization
$
22
$
22
$
33
—
%
(32
) %
EBITDA*
$
46
$
36
$
56
26
%
(18
) %
EBITDA margin*
7.4
%
6.0
%
7.9
%
1.4
pts
-0.5
pts
Oilfield Equipment (OFE) orders were down $51 million, or 9%,
year-over-year, driven primarily by lower order intake in Subsea
Production Systems and from the removal of Subsea Drilling Services
from consolidated OFE operations, partially offset by higher order
intake in Services and Flexibles. Equipment orders were down 26%
year-over-year and services orders were up 26% year-over-year.
OFE revenue of $619 million for the quarter decreased $92
million, or 13%, year-over-year. The decrease was driven by lower
volume in Subsea Productions Systems and Surface Pressure Control
Projects, and from the removal of Subsea Drilling Services from
consolidated OFE operations. These decreases were partially offset
by higher volume in Services.
Segment operating income before tax for the quarter was $23
million, flat year-over-year. The volume decrease year-over-year
was offset by productivity gains.
*Non-GAAP measure.
Turbomachinery & Process Solutions
(in millions)
Three Months Ended
Variance
Turbomachinery & Process
Solutions
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Orders
$
2,974
$
1,719
$
1,832
73
%
62
%
Revenue
$
1,776
$
1,562
$
1,946
14
%
(9
) %
Operating income
$
346
$
278
$
332
24
%
4
%
Operating income margin
19.5
%
17.8
%
17.1
%
1.7
pts
2.4
pts
Depreciation & amortization
$
30
$
30
$
31
1
%
(2
) %
EBITDA*
$
375
$
308
$
362
22
%
4
%
EBITDA margin*
21.1
%
19.7
%
18.6
%
1.4
pts
2.5
pts
Turbomachinery & Process Solutions (TPS) orders were up
$1,142 million, or 62% year-over-year. Equipment orders were up
$1,067 million year-over-year and service orders were up $75
million or 7% year-over-year.
TPS revenue of $1,776 million for the quarter decreased $170
million, or 9%, year-over-year. The decrease was driven by lower
equipment and projects revenue, partially offset by higher
contractual services volume. Equipment revenue in the quarter
represented 41% of total segment revenue, and Services revenue
represented 59% of total segment revenue.
Segment operating income before tax for the quarter was $346
million, up $14 million, or 4%, year-over-year. The increase was
driven primarily by favorable mix as a result of higher Services
revenue.
*Non-GAAP measure.
Digital Solutions
(in millions)
Three Months Ended
Variance
Digital Solutions
December 31,
2021
September 30,
2021
December 31,
2020
Sequential
Year-over-
year
Orders
$
605
$
523
$
528
16
%
14
%
Revenue
$
558
$
510
$
556
9
%
—
%
Operating income
$
51
$
26
$
76
97
%
(33
) %
Operating income margin
9.2
%
5.1
%
13.8
%
4.1
pts
-4.6
pts
Depreciation & amortization
$
22
$
22
$
25
1
%
(11
) %
EBITDA*
$
73
$
48
$
101
53
%
(28
) %
EBITDA margin*
13.1
%
9.4
%
18.2
%
3.8
pts
-5.1
pts
Digital Solutions (DS) orders were up $76 million, or 14%
year-over-year, driven by higher order intake in Digital Solutions
businesses with the exception of the Nexus Controls business.
DS revenue of $558 million for the quarter increased $2 million,
year-over-year, driven by higher volume in the Waygate
Technologies, Process & Pipeline Services and Reuter-Stokes
businesses, offset by lower volume in the Nexus Controls and Bently
Nevada businesses.
Segment operating income before tax for the quarter was $51
million, down $25 million, or 33% year-over-year. The decrease
year-over-year was primarily driven by lower cost productivity.
*Non-GAAP measure.
2021 Total Year Results
Twelve Months Ended
Orders
December 31,
2021
December 31,
2020
Variance
Year-over-year
Oilfield Services
$
9,538
$
10,119
(6
)%
Oilfield Equipment
2,260
2,184
3
%
Turbomachinery and Process Solutions
7,653
6,424
19
%
Digital Solutions
2,217
1,986
12
%
Total Orders
$
21,668
$
20,714
5
%
Revenue
Oilfield Services
$
9,542
$
10,140
(6
)%
Oilfield Equipment
2,486
2,844
(13
)%
Turbomachinery and Process Solutions
6,451
5,705
13
%
Digital Solutions
2,057
2,015
2
%
Total Revenue
$
20,536
$
20,705
(1
)%
Segment operating income
Oilfield Services
$
761
$
487
56
%
Oilfield Equipment
69
19
F
Turbomachinery and Process Solutions
1,050
805
30
%
Digital Solutions
126
193
(35
)%
Total segment operating income
2,006
1,504
33
%
Corporate
(429
)
(464
)
8
%
Inventory impairment
—
(246
)
F
Goodwill impairment
—
(14,773
)
F
Restructuring, impairment & other
(209
)
(1,866
)
89
%
Separation related
(60
)
(134
)
55
%
Operating income (loss)
1,310
(15,978
)
F
Adjusted operating income (1)
1,576
1,040
52
%
Depreciation and amortization
1,105
1,317
(16
)%
Adjusted EBITDA (2)
$
2,681
$
2,357
14
%
"F" is used in most instances when
variance is above 100%. Additionally, "U" is used in most instances
when variance is below (100)%.
(1)
Adjusted operating income, a non-GAAP
measure, excludes inventory impairment, goodwill impairment,
restructuring, impairment & other charges, and separation
related costs from GAAP operating income (loss).
(2)
Adjusted EBITDA, a non-GAAP measure, adds
depreciation and amortization to adjusted operating income.
Reconciliation of GAAP
to non-GAAP Financial Measures
Management provides non-GAAP financial measures 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.
Table 1a. Reconciliation of Operating Income to Adjusted
Operating Income
Three Months Ended
(in millions)
December 31,
2021
September 30,
2021
December 31,
2020
Operating income (GAAP)
$
574
$
378
$
182
Separation related
8
11
24
Restructuring, impairment & other
(11
)
14
229
Inventory impairment
—
—
27
Total operating income adjustments
(3
)
24
281
Adjusted operating income (non-GAAP)
$
571
$
402
$
462
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 Operating Income to EBITDA and
Adjusted EBITDA
Three Months Ended
(in millions)
December 31,
2021
September 30,
2021
December 31,
2020
Operating income (GAAP)
$
574
$
378
$
182
Depreciation & amortization
273
262
307
EBITDA (non-GAAP)
847
640
489
Total operating income adjustments (1)
(3
)
24
281
Adjusted EBITDA (non-GAAP)
$
844
$
664
$
770
(1)
See Table 1a for the identified
adjustments to operating income.
Table 1b reconciles operating income, which is the directly
comparable financial result determined in accordance with GAAP, to
EBITDA (a non-GAAP financial measure). Adjusted EBITDA (a non-GAAP
financial measure) excludes the impact of certain identified
items.
Table 1c. Reconciliation of Net Income Attributable to Baker
Hughes to Adjusted Net Income (Loss) Attributable to Baker
Hughes
Three Months Ended
(in millions, except per share
amounts)
December 31,
2021
September 30,
2021
December 31,
2020
Net income attributable to Baker Hughes
(GAAP)
$
294
$
8
$
653
Total operating income adjustments (1)
(3
)
24
281
Other adjustments (non-operating) (2)
(77
)
140
(1,412
)
Tax effect on total adjustments and other
tax items (3)
1
(3
)
114
Total adjustments, net of income tax
(79
)
161
(1,017
)
Less: adjustments attributable to
noncontrolling interests
(9
)
28
(314
)
Adjustments attributable to Baker
Hughes
(70
)
133
(703
)
Adjusted net income (loss) attributable to
Baker Hughes (non-GAAP)
$
224
$
141
$
(50
)
Denominator:
Weighted-average shares of Class A common
stock outstanding diluted
906
857
713
Adjusted diluted earnings (loss) per Class
A share (non-GAAP)
$
0.25
$
0.16
$
(0.07
)
(1)
See Table 1a for the identified
adjustments to operating income.
(2)
4Q'21 primarily due to the gain
from the change in fair value of our investment in ADNOC Drilling,
partially offset by the loss from the change in fair value of our
investment in C3 AI. 3Q'21 primarily due to losses from the change
in fair value of our investment in C3 AI. 4Q'20 primarily related
to the gain from the change in fair value of our investment in C3
AI.
(3)
4Q'20 includes tax expense
related to a business disposition.
Table 1c reconciles net income attributable to Baker Hughes,
which is the directly comparable financial result determined in
accordance with GAAP, to adjusted net income (loss) attributable to
Baker Hughes (a non-GAAP financial measure). Adjusted net income
(loss) attributable to Baker Hughes excludes the impact of certain
identified items.
Table 1d. Reconciliation of Cash Flow From Operating
Activities to Free Cash Flow
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
(in millions)
2021
2021
2020
2021
2020
Cash flow from operating activities
(GAAP)
$
773
$
416
$
378
$
2,374
$
1,304
Add: cash used for capital expenditures,
net of proceeds from disposal of assets
(129
)
(111
)
(127
)
(541
)
(787
)
Free cash flow (non-GAAP)
$
645
$
305
$
250
$
1,832
$
518
Table 1d 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
operating activities less expenditures for capital assets plus
proceeds from disposal of assets.
Financial Tables
(GAAP)
Condensed Consolidated Statements of
Income
(Unaudited)
Three Months Ended
(In millions, except per share
amounts)
December 31,
2021
September 30,
2021
December 31,
2020
Revenue
$
5,519
$
5,093
$
5,495
Costs and expenses:
Cost of revenue
4,315
4,083
4,486
Selling, general and administrative
633
607
574
Restructuring, impairment and other
(11
)
14
229
Separation related
8
11
24
Total costs and expenses
4,945
4,715
5,313
Operating income
574
378
182
Other non-operating income (loss), net
208
(102
)
1,407
Interest expense, net
(95
)
(67
)
(69
)
Income before income taxes
688
209
1,520
Provision for income taxes
(352
)
(193
)
(568
)
Net income
335
16
952
Less: Net income attributable to
noncontrolling interests
42
8
299
Net income attributable to Baker Hughes
Company
$
294
$
8
$
653
Per share amounts:
Basic income per Class A common share
$
0.33
$
0.01
$
0.92
Diluted income per Class A common
share
$
0.32
$
0.01
$
0.91
Weighted average shares:
Class A basic
896
851
713
Class A diluted
906
857
717
Cash dividend per Class A common share
$
0.18
$
0.18
$
0.18
Condensed Consolidated Statements of Income
(Loss)
(Unaudited)
Year Ended December
31,
(In millions, except per share
amounts)
2021
2020
2019
Revenue
$
20,536
$
20,705
$
23,838
Costs and expenses:
Cost of revenue
16,487
17,506
19,406
Selling, general and administrative
2,470
2,404
2,832
Goodwill impairment
—
14,773
—
Restructuring, impairment and other
209
1,866
342
Separation related
60
134
184
Total costs and expenses
19,226
36,683
22,764
Operating income (loss)
1,310
(15,978
)
1,074
Other non-operating income (loss), net
(583
)
1,040
(84
)
Interest expense, net
(299
)
(264
)
(237
)
Income (loss) before income taxes
428
(15,202
)
753
Provision for income taxes
(758
)
(559
)
(482
)
Net income (loss)
(330
)
(15,761
)
271
Less: Net income (loss) attributable to
noncontrolling interests
(111
)
(5,821
)
143
Net income (loss) attributable to Baker
Hughes Company
$
(219
)
$
(9,940
)
$
128
Per share amounts:
Basic & diluted income (loss) per
Class A common share
$
(0.27
)
$
(14.73
)
$
0.23
Weighted average shares:
Class A basic
824
675
555
Class A diluted
824
675
557
Cash dividend per Class A common share
$
0.72
$
0.72
$
0.72
Condensed Consolidated Statements of
Financial Position
(Unaudited)
December 31,
(In millions)
2021
2020
ASSETS
Current Assets:
Cash and cash equivalents
$
3,853
$
4,132
Current receivables, net
5,651
5,622
Inventories, net
3,979
4,421
All other current assets
1,582
2,280
Total current assets
15,065
16,455
Property, plant and equipment, less
accumulated depreciation
4,877
5,358
Goodwill
5,959
5,977
Other intangible assets, net
4,131
4,397
Contract and other deferred assets
1,638
2,001
All other assets
3,678
3,819
Total assets
$
35,348
$
38,007
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$
3,745
$
3,532
Short-term debt and current portion of
long-term debt
40
889
Progress collections and deferred
income
3,272
3,454
All other current liabilities
2,111
2,352
Total current liabilities
9,168
10,227
Long-term debt
6,687
6,744
Liabilities for pensions and other
postretirement benefits
1,110
1,217
All other liabilities
1,637
1,577
Equity
16,746
18,242
Total liabilities and equity
$
35,348
$
38,007
Outstanding Baker Hughes Company
shares:
Class A common stock
909
724
Class B common stock
117
311
Condensed Consolidated Statements of Cash
Flows
(Unaudited)
Three Months
Ended
December 31,
Twelve Months Ended
December 31,
(In millions)
2021
2021
2020
Cash flows from operating activities:
Net income (loss)
$
336
$
(330
)
$
(15,761
)
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation and amortization
273
1,105
1,317
(Gain) loss on equity securities
(110
)
845
(1,417
)
Provision for deferred income taxes
109
133
160
Other asset impairments
(14
)
7
1,436
Goodwill impairment
—
—
14,773
Loss on sale of business
—
—
353
Working capital
10
480
216
Other operating items, net
170
134
227
Net cash flows from operating
activities
773
2,374
1,304
Cash flows from investing activities:
Expenditures for capital assets, net of
proceeds from disposal of assets
(129
)
(541
)
(787
)
Other investing items, net
(122
)
78
169
Net cash flows used in investing
activities
(251
)
(463
)
(618
)
Cash flows from financing activities:
Net repayment of debt and other
borrowings
(1,294
)
(1,354
)
(246
)
Proceeds from (repayments of) commercial
paper
—
(832
)
737
Proceeds from issuance of long-term
debt
1,250
1,250
500
Dividends paid
(156
)
(592
)
(488
)
Distributions to GE
(30
)
(157
)
(256
)
Repurchase of Class A common stock
(328
)
(434
)
—
Other financing items, net
—
(24
)
(22
)
Net cash flows from (used in) financing
activities
(558
)
(2,143
)
225
Effect of currency exchange rate changes
on cash and cash equivalents
(38
)
(47
)
(28
)
Increase (decrease) in cash and cash
equivalents
(73
)
(279
)
883
Cash and cash equivalents, beginning of
period
3,926
4,132
3,249
Cash and cash equivalents, end of
period
$
3,853
$
3,853
$
4,132
Supplemental cash flows disclosures:
Income taxes paid, net of refunds
$
133
$
314
$
441
Interest paid
$
101
$
305
$
289
Supplemental Financial Information
Supplemental financial information can be found on the Company’s
website at: investors.bakerhughes.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 8:30 a.m. Eastern time, 7:30
a.m. Central time on Thursday, January 20, 2022, the content of
which is not part of this earnings release. The conference call
will be broadcast live via a webcast and can be accessed by
visiting the Events and Presentations page on the Company’s website
at: investors.bakerhughes.com. An archived version of the webcast
will be available on the website for one month following the
webcast.
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 December 31, 2020; the Company's
subsequent quarterly reports on Form 10-Q for the quarterly periods
ended March 31, 2021, June 30, 2021 and September 30, 2021; and
those set forth from time to time in other filings with the
Securities and Exchange Commission (“SEC”). The documents are
available through the Company’s website at:
www.investors.bakerhughes.com or through the SEC’s Electronic Data
Gathering and Analysis Retrieval (“EDGAR”) system at: www.sec.gov.
We undertake no obligation to publicly update or revise any
forward-looking statement.
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:
COVID-19 - The continued spread of the COVID-19 virus and the
continuation of the measures to try to contain the virus, such as
travel bans and restrictions, quarantines, shelter in place orders,
and shutdowns, and the related uncertainties.
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 and sanctions.
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, such as tornadoes and
hurricanes, that affect exploration and production activities;
Organization of Petroleum Exporting Countries (“OPEC”) policy and
the adherence by OPEC nations to their OPEC production quotas.
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.
About Baker Hughes:
Baker Hughes (Nasdaq: BKR) is an energy technology company that
provides solutions for energy and industrial customers worldwide.
Built on a century of experience and with operations in over 120
countries, our innovative technologies and services are taking
energy forward - making it safer, cleaner and more efficient for
people and the planet. Visit us at bakerhughes.com
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220120005131/en/
Investor Relations Jud Bailey +1 281-809-9088
investor.relations@bakerhughes.com
Media Relations Thomas Millas +1 713-879-2862
thomas.millas@bakerhughes.com
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