Baker Hughes Company (BKR Quick QuoteBKR - Free Report) reported third-quarter 2021 adjusted earnings of 16 cents per share, missing the Zacks Consensus Estimate of 22 cents. However, the bottom line improved drastically from the year-ago period’s profit of 4 cents per share.

Revenues totaled $5,093 million, missing the Zacks Consensus Estimate of $5,343 million. The figure increased from the year-ago quarter’s $5,049 million.

The lower-than-expected results were caused by a decline in cost productivity in Digital Solutions. This was offset by higher contributions from the Turbomachinery & Process Solutions business unit.

Segmental Performance

Revenues from the Oilfield Services (OFS) unit amounted to $2,419 million, up 5% from the year-ago figure of $2,308 million. Operating income from the segment was $190 million, up from $93 million reported in third-quarter 2020 backed by higher volumes. Sales in regions like the Middle East, Latin America and Russia CIS increased in the third quarter.

Revenues from the Oilfield Equipment (OFE) unit totaled $603 million, down 17% from the prior-year quarter’s $726 million. The segment was affected by a decline in volumes in the company’s Subsea Production Systems. The segment reported a profit of $14 million, down from $19 million, primarily due to decreased volume.

Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,562 million from $1,513 million a year ago owing to higher equipment and services volumes. Segmental income increased to $278 million from $191 million in the third quarter of 2020 owing to higher cost productivity and volumes.

Revenues from the Digital Solutions (DS) segment amounted to $510 million, up 1% from $503 million in the year-ago quarter. Process & Pipeline Services and Waygate Technologies businesses witnessed higher volumes that supported revenue growth. Operating profit at the segment totaled $26 million, down 44% from the year-ago quarter’s $46 million. The segment was affected by a decline in cost productivity.

Costs and Expenses

The company recorded total costs and expenses of $4,715 million for the third quarter, down from the year-ago figure of $5,098 million.

Orders

Total orders from all business segments for third-quarter 2021 were $5,378 million, up 5% year over year due to higher order intakes from segments like Oilfield Equipment as well as Oilfield Services.

Free Cash Flow

The company generated positive free cash flow of $305 million in the reported quarter compared with $52 million in the year-ago period.

Capex & Balance Sheet

Baker Hughes’ net capital expenditure for the third quarter totaled $111 million.

As of Sep 30, 2021, the company had cash and cash equivalents of $3,926 million. At the third quarter-end, it had a long-term debt of $6,708 million, implying a debt to capitalization of 28.4%.

Outlook

The company expects continued recovery in the global economy in the remainder of this year and next year. Thus, demand for oil and natural will continue to ramp up, brightening the outlook for oilfield services.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include Whiting Petroleum Corporation , Comstock Resources, Inc. (CRK Quick QuoteCRK - Free Report) and Range Resources Corporation (RRC Quick QuoteRRC - 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.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Comstock is expected to witness earnings growth of 378.3% in 2021.

Range Resources has seen upward earnings estimate revisions for 2021 in the past 30 days.