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Baker Hughes Company (BKR - Free Report) reported third-quarter 2023 adjusted earnings of 42 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The bottom line improved from the year-ago quarter’s level of 26 cents.
Total quarterly revenues of $6,641 million surpassed the Zacks Consensus Estimate of $6,515 million. The top line also increased from the year-ago quarter’s level of $5,369 million.
Strong quarterly results were primarily driven by higher contributions from the Oilfield Services and Equipment, and the Industrial & Energy Technology business units.
Baker Hughes Company Price, Consensus and EPS Surprise
Baker Hughes was reorganized from four to two operating segments — Oilfield Services and Equipment, and Industrial & Energy Technology. The segments became operational from Oct 1, 2022.
Revenues from the Oilfield Services and Equipment unit amounted to $3,951 million, up 16% from the year-ago quarter’s figure of $3,403 million. Our estimate for the company’s revenues from the same unit was pegged at $3,986 million.
Operating income from the segment totaled $465 million, up 43% from $324 million reported in third-quarter 2022, backed by higher volumes.
Revenues from the Industrial & Energy Technology unit amounted to $2,691 million, up 37% from the year-ago quarter’s level of $1,967 million. Our estimate for the company’s revenues from the same unit was pegged at $2,491.3 million.
Operating income from the segment totaled $346 million, up 23% from the year-ago quarter’s level of $282 million, due to higher volumes and pricing.
Costs and Expenses
Baker Hughes recorded total costs and expenses of $5,927 million in the third quarter, up from the year-ago quarter’s figure of $5,100 million. The reported number is also above our projection of $5,912 million.
Orders
Total orders of the company from all business segments amounted to $8,512 million, up 40% year over year. We expected the figure to be $6,985 million.
The outperformance resulted from higher order intakes from the Oilfield Services and Equipment, and the Industrial & Energy Technology segments.
Free Cash Flow
Baker Hughes generated a free cash flow of $592 million in the reported quarter compared with $417 million in the year-ago period.
Capex & Balance Sheet
BKR’s net capital expenditure in the third quarter totaled $219 million.
As of Sep 30, 2023, it had cash and cash equivalents of $3,201 million. The company had a long-term debt of $5,857 million at the end of the reported quarter, marking a debt-to-capitalization of 27.7%.
Outlook
For 2023, Baker Hughes expects revenues in the range of $24.8-$26 billion. It projects adjusted EBITDA in the band of $3.65-$3.8 billion.
Zacks Rank & Stocks to Consider
Baker Hughes currently carries a Zacks Rank #3 (Hold).
Houston, TX-based APA Corporation is one of the world's leading independent energy companies, engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. APA boasts a large, geographically diversified reserve base with multi-year trends in reserve replacement. It has witnessed an upward earnings estimate revision for 2024 in the past seven days.
APA’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.9%.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Its total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 in the past seven days.
Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 4.34%.
Diamondback Energy is an independent oil and gas exploration and production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. With an attractive production profile, favorable industry trends and FANG’s low breakeven economics, the margin of safety on investment is likely very high. The company has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 30 days.
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Baker Hughes (BKR) Q3 Earnings & Revenues Beat Estimates
Baker Hughes Company (BKR - Free Report) reported third-quarter 2023 adjusted earnings of 42 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The bottom line improved from the year-ago quarter’s level of 26 cents.
Total quarterly revenues of $6,641 million surpassed the Zacks Consensus Estimate of $6,515 million. The top line also increased from the year-ago quarter’s level of $5,369 million.
Strong quarterly results were primarily driven by higher contributions from the Oilfield Services and Equipment, and the Industrial & Energy Technology business units.
Baker Hughes Company Price, Consensus and EPS Surprise
Baker Hughes Company price-consensus-eps-surprise-chart | Baker Hughes Company Quote
Segmental Performance
Baker Hughes was reorganized from four to two operating segments — Oilfield Services and Equipment, and Industrial & Energy Technology. The segments became operational from Oct 1, 2022.
Revenues from the Oilfield Services and Equipment unit amounted to $3,951 million, up 16% from the year-ago quarter’s figure of $3,403 million. Our estimate for the company’s revenues from the same unit was pegged at $3,986 million.
Operating income from the segment totaled $465 million, up 43% from $324 million reported in third-quarter 2022, backed by higher volumes.
Revenues from the Industrial & Energy Technology unit amounted to $2,691 million, up 37% from the year-ago quarter’s level of $1,967 million. Our estimate for the company’s revenues from the same unit was pegged at $2,491.3 million.
Operating income from the segment totaled $346 million, up 23% from the year-ago quarter’s level of $282 million, due to higher volumes and pricing.
Costs and Expenses
Baker Hughes recorded total costs and expenses of $5,927 million in the third quarter, up from the year-ago quarter’s figure of $5,100 million. The reported number is also above our projection of $5,912 million.
Orders
Total orders of the company from all business segments amounted to $8,512 million, up 40% year over year. We expected the figure to be $6,985 million.
The outperformance resulted from higher order intakes from the Oilfield Services and Equipment, and the Industrial & Energy Technology segments.
Free Cash Flow
Baker Hughes generated a free cash flow of $592 million in the reported quarter compared with $417 million in the year-ago period.
Capex & Balance Sheet
BKR’s net capital expenditure in the third quarter totaled $219 million.
As of Sep 30, 2023, it had cash and cash equivalents of $3,201 million. The company had a long-term debt of $5,857 million at the end of the reported quarter, marking a debt-to-capitalization of 27.7%.
Outlook
For 2023, Baker Hughes expects revenues in the range of $24.8-$26 billion. It projects adjusted EBITDA in the band of $3.65-$3.8 billion.
Zacks Rank & Stocks to Consider
Baker Hughes currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy sector are APA Corporation (APA - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and Pioneer Natural Resources Company and Diamondback Energy Inc. (FANG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based APA Corporation is one of the world's leading independent energy companies, engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. APA boasts a large, geographically diversified reserve base with multi-year trends in reserve replacement. It has witnessed an upward earnings estimate revision for 2024 in the past seven days.
APA’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.9%.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Its total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 in the past seven days.
Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 4.34%.
Diamondback Energy is an independent oil and gas exploration and production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. With an attractive production profile, favorable industry trends and FANG’s low breakeven economics, the margin of safety on investment is likely very high. The company has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 30 days.