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Baker Hughes (BKR) Q4 Earnings Miss, Revenues Beat Estimates

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Baker Hughes (BKR - Free Report) reported fourth-quarter 2021 adjusted earnings of 25 cents per share, missing the Zacks Consensus Estimate of 29 cents. However, the bottom line compared favorably with the year-ago period’s loss of 7 cents per share.

Revenues totaled $5,519 million, beating the Zacks Consensus Estimate of $5,497 million. The figure increased from the year-ago quarter’s $5,495 million.

The lower-than-expected earnings were caused by a decline in cost productivity in Digital Solutions. This was offset by higher contributions from the Oilfield Services business unit.

Baker Hughes Company Price, Consensus and EPS Surprise

 

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 $2,566 million, up 12% from the year-ago quarter’s figure of $2,282 million. Baker Hughes’ operating income from the segment was $256 million, up from $142 million reported in fourth-quarter 2020, backed by higher volumes and prices.

Revenues of Baker Hughes from the Oilfield Equipment (OFE) unit totaled $619 million, down 13% from the prior-year quarter’s $712 million. The segment was affected by a decline in volumes in Baker Hughes’ Subsea Productions Systems and Surface Pressure Control Projects. Increased volume in Services partially offset the negatives. The segment reported a profit of $23 million, almost flat year over year.

Revenues of Baker Hughes from the Turbomachinery & Process Solutions (TPS) unit declined to $1,776 million from $1,946 million a year ago, owing to a decline in equipment and projects revenues. The segmental income of Baker Hughes increased to $346 million from $332 million in the fourth quarter of 2020, owing to an increase in contractual services volume.

Revenues of Baker Hughes from the Digital Solutions (DS) segment amounted to $558 million, up marginally from $556 million in the year-ago quarter. Process & Pipeline Services and Waygate Technologies businesses witnessed higher volumes that supported revenue growth. The operating profit of Baker Hughes at the segment totaled $51 million, down 33% from the year-ago quarter’s $76 million. The segment was affected by a decline in cost productivity.

Costs and Expenses

Baker Hughes recorded total costs and expenses of $4,945 million in the fourth quarter, down from the year-ago quarter’s figure of $5,313 million.

Orders

Total orders of Baker Hughes from all business segments in fourth-quarter 2021 amounted to $6,656 million, up 28% year over year due to higher-order intakes from segments like Turbomachinery & Process Solutions, Oilfield Equipment and Digital Solutions.

Free Cash Flow

Baker Hughes generated a positive free cash flow of $645 million in the reported quarter compared with $250 million in the year-ago period.

Capex & Balance Sheet

Baker Hughes’ net capital expenditures in the fourth quarter totaled $129 million.

As of Dec 31, 2021, Baker Hughes had cash and cash equivalents of $3,853 million. At the fourth quarter-end, the company had long-term debt of $6,687 million, implying a debt to capitalization of 28.7%.

Outlook

Baker Hughes expects continued global economic growth this year, which will lead to increased energy demand. This will translate to an attractive business scenario for BKR’s customers.

Zacks Rank & Stock to Consider

Baker Hughes currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Murphy USA Inc. (MUSA - Free Report) , The Williams Companies Inc (WMB - Free Report) and Phillips 66 (PSX - Free Report) . While Murphy USA sports a Zacks Rank #1 (Strong Buy), The Williams Companies and Phillips 66 carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is well-positioned to gain from improving gasoline demand in the coming months since it is a prominent retailer of gasoline and convenience merchandise. Having a network of retail gasoline and convenience stores in 27 states, Murphy USA is able to serve an estimated two million customers every day.

In the past 30 days, Murphy USA has witnessed upward earnings estimate revisions for 2021 and 2022, respectively.

The Williams Companies is well poised to capitalize on mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.

With its pipeline networks spread across more than 30,000 miles, The Williams Companies connects premium basins in the United States to the key market. WMB’s assets can fulfill 30% of the nation’s natural gas consumption, utilized for heating purposes and clean-energy generations.

Phillips 66 is a diversified energy player with operations spreading across refining, midstream, chemicals and marketing. In each of its business segments, Phillips 66 is a leading player, making its business model more stable as compared with pure-play refining players.

In the past 60 days, Phillips 66 witnessed upward earnings estimate revisions for 2021 and 2022, respectively.