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Baker Hughes Company (BKR - Free Report) reported first-quarter 2021 adjusted earnings of 12 cents per share, beating the Zacks Consensus Estimate and improving from the year-ago profit by a penny. The strong quarterly earnings were owing to higher contributions from the Turbomachinery & Process Solutions business unit and increased cost productivity.
Revenues totaled $4,782 million, missing the Zacks Consensus Estimate of $4,797 million. Moreover, the figure was lower than the year-ago quarter’s $5,425 million.
Baker Hughes Company Price, Consensus and EPS Surprise
Revenues from the Oilfield Services (OFS) unit amounted to $2,200 million, down 30% from the year-ago $3,139 million. The downside was due to lower revenues from Middle East and Europe. Operating income from the segment was $143 million, down from $206 million reported in first-quarter 2020.
Revenues from the Oilfield Equipment (OFE) unit totaled $628 million, down 12% from the prior-year quarter’s $712 million. The segment was affected by lower volumes in the company’s Subsea Drilling Systems business and Subsea Services. Notably, the segment reported a profit of $4 million against the year-ago loss of $8 million, thanks to increased cost productivity.
Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,485 million from $1,085 million a year ago owing to higher equipment volumes. Moreover, segmental income increased to $207 million from $134 million in the first quarter of 2020 owing to higher productivity and volumes.
Revenues from the Digital Solutions (DS) segment amounted to $470 million, down 4% from $489 million in the year-ago quarter. Operating profit at the segment totaled $24 million, down 17% from the year-ago quarter’s $29 million. The segment was affected by a decline in volumes from Process & Pipeline Services and Nexus Controls.
Costs and Expenses
The company recorded total costs and expenses of $4,618 million for the first quarter, down from the year-ago figure of $21,484 million.
Orders
Total orders from all business segments for first-quarter 2021 were $4,541 million, down 18% year over year due to lower order intakes from segments like Oilfield Services and Oilfield Equipment.
Free Cash Flow
The company generated positive free cash flow of $498 million in the reported quarter compared with $152 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure for the first quarter totaled $180 million.
As of Mar 31, 2021, the company had cash and cash equivalents of $4,382 million. At first quarter-end, it had a long-term debt of $6,733 million, implying a debt to capitalization of 30.4%.
Outlook
The company believes that there will be recovery in oil demand and global economy in 2021 that has been hit badly by the coronavirus pandemic. The oilfield service firm also expects the industry to be in a footing for stronger recovery in 2022 as spending and activity levels are gradually gaining momentum.
EOG Resources is likely to see earnings growth of 272.6% in 2021.
Diamondback is likely to witness earnings growth of 112.5% in 2021.
Matador is expected to see earnings growth of 300% in 2021.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Baker Hughes (BKR) Q1 Earnings Beat Estimates, Increase Y/Y
Baker Hughes Company (BKR - Free Report) reported first-quarter 2021 adjusted earnings of 12 cents per share, beating the Zacks Consensus Estimate and improving from the year-ago profit by a penny. The strong quarterly earnings were owing to higher contributions from the Turbomachinery & Process Solutions business unit and increased cost productivity.
Revenues totaled $4,782 million, missing the Zacks Consensus Estimate of $4,797 million. Moreover, the figure was lower than the year-ago quarter’s $5,425 million.
Baker Hughes Company Price, Consensus and EPS Surprise
Baker Hughes Company price-consensus-eps-surprise-chart | Baker Hughes Company Quote
Segmental Performance
Revenues from the Oilfield Services (OFS) unit amounted to $2,200 million, down 30% from the year-ago $3,139 million. The downside was due to lower revenues from Middle East and Europe. Operating income from the segment was $143 million, down from $206 million reported in first-quarter 2020.
Revenues from the Oilfield Equipment (OFE) unit totaled $628 million, down 12% from the prior-year quarter’s $712 million. The segment was affected by lower volumes in the company’s Subsea Drilling Systems business and Subsea Services. Notably, the segment reported a profit of $4 million against the year-ago loss of $8 million, thanks to increased cost productivity.
Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,485 million from $1,085 million a year ago owing to higher equipment volumes. Moreover, segmental income increased to $207 million from $134 million in the first quarter of 2020 owing to higher productivity and volumes.
Revenues from the Digital Solutions (DS) segment amounted to $470 million, down 4% from $489 million in the year-ago quarter. Operating profit at the segment totaled $24 million, down 17% from the year-ago quarter’s $29 million. The segment was affected by a decline in volumes from Process & Pipeline Services and Nexus Controls.
Costs and Expenses
The company recorded total costs and expenses of $4,618 million for the first quarter, down from the year-ago figure of $21,484 million.
Orders
Total orders from all business segments for first-quarter 2021 were $4,541 million, down 18% year over year due to lower order intakes from segments like Oilfield Services and Oilfield Equipment.
Free Cash Flow
The company generated positive free cash flow of $498 million in the reported quarter compared with $152 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure for the first quarter totaled $180 million.
As of Mar 31, 2021, the company had cash and cash equivalents of $4,382 million. At first quarter-end, it had a long-term debt of $6,733 million, implying a debt to capitalization of 30.4%.
Outlook
The company believes that there will be recovery in oil demand and global economy in 2021 that has been hit badly by the coronavirus pandemic. The oilfield service firm also expects the industry to be in a footing for stronger recovery in 2022 as spending and activity levels are gradually gaining momentum.
Zacks Rank & Stocks to Consider
Baker Hughes currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include EOG Resources, Inc. (EOG - Free Report) , Diamondback Energy, Inc. (FANG - Free Report) and Matador Resources Company (MTDR - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EOG Resources is likely to see earnings growth of 272.6% in 2021.
Diamondback is likely to witness earnings growth of 112.5% in 2021.
Matador is expected to see earnings growth of 300% in 2021.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>