Baker Hughes Q1 Adjusted EPS $0.09

Baker Hughes, a GE company, (BHGE) has reported profit of $70 million or 17 cents per diluted share on GAAP basis for the quarter ended March 31, 2018.

Adjusted diluted earnings per share were 9 cents per share.

The company generated revenue of $5.4 billion for the quarter, down 7% of $400 million sequentially and up 1% year-over-year on a combined business basis.

The decrease was driven primarily by lower revenue in Turbomachinery & Process Solutions which was down 12%, as well as seasonality in Digital Solutions and Oilfield Services, which were down 17% and 4%, respectively.

Revenue by Segment

Oilfield Services (OFS) revenue of $2,678 million for the quarter decreased by $103 million, or 4%, sequentially. The sequential decrease in revenue was mainly driven by seasonality.

Oilfield Equipment revenue of $664 million for the quarter decreased $52 million, or 7%, year-over-year. The decrease was driven by the lower backlog in the Subsea Production Systems business, as well as lower convertible orders across the Drilling Systems and Flexible Pipe businesses, partially offset by higher volume in the Surface Pressure Control and Services businesses.

Turbomachinery & Process Solutions revenue of $1,460 million for the quarter decreased $184 million, or 11%, year-over-year. The decrease was driven by lower new units and services volume in the upstream segment, partially offset by increased volume in the businesses that serve the downstream segments. Equipment revenue in the quarter represented 41%, and Service revenue represented 59% of total revenue.

Digital Solutions revenue of $598 million for the quarter increased 4% year-over-year, mainly driven by the Pipeline and Process Solutions and Inspection Technologies businesses, partially offset by a decline in the Controls business.

Orders for the quarter were $5,24 billion, down 8% sequentially and up 9% year-over-year.

On a GAAP basis, operating loss for the first quarter of 2018 was $41 million. Operating loss decreased 63% sequentially and increased unfavorably year-over-year.

Adjusted operating income (a non-GAAP measure) for the first quarter of 2018 was $228 million, which excludes adjustments totaling $269 million before tax, mainly related to restructuring charges, inventory impairments and merger and related costs.

Depreciation and Amortization for the first quarter of 2018 was $388 million.

Corporate costs were $98 million in the first quarter of 2018, compared to $92 million in the prior quarter and $158 million in the first quarter of 2017.

Benefit for income taxes was $86 million for the first quarter. Included is a $124 million benefit related to the impact of the U.S. tax reform in December 2017.

“We made strong progress in the quarter, securing several key commercial wins, executing on our synergy targets and delivering for our customers. I am pleased with our performance on our priorities of growing share, improving margins and generating cash,” said Lorenzo Simonelli, BHGE chairman and chief executive officer.

“Looking forward, the macro outlook is favorable and we remain focused on positioning the Company for further growth and profitability. With our talented and experienced team, leading portfolio and a focus on execution, we are set up to deliver this year and beyond.”

Backlog in the first quarter ended at $22.2 billion, an increase of $1.2 billion or 6% from the fourth quarter of 2017. The increase was primarily driven by the impact from adopting the new revenue recognition accounting standard. Equipment backlog was $5.4 billion, up 1%, sequentially. Services backlog was $16.8 billion, up $1.1 billion, or 7%, sequentially.

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