Baker Hughes In Q2: TAKE THREE

Gas Technology orders steady bookings: BKR’s total book-to-bill ratio was 1.2x in Q2 2023, a slight decline compared to a quarter ago. Order growth was significantly skewed toward the Industrial & Energy Technology segment, driven by a significant uptick in Gas Technology – Equipment orders. Among the most prominent orders in Q2 include an LNG order from Bechtel for Main Refrigerant Compressors, a supply of gas turbines for a new LPG plant in Algeria, and a long-term multi-maintenance program for a fleet of steam turbines and centrifugal compressors.

Segment revenue and profit improved handsomely, but management stayed positive: A robust growth in international geographies and resilient North American sales led to OFSE segment revenue and profit growth. Revenues from the IET segment increased more sharply, by 14%, compared to a quarter ago, while the operating profit jumped by 29%. A remarkable growth in Gas Technology-related products and services spearheaded the charge in Q2. The management recognized the ” softness in North America” but was encouraged by the “international and offshore markets,” specifically the LNG market in Europe and Asia.

Impressive cash flow growth while balance sheet stays stable: BKR’s cash flow from operations improved tremendously, by 236%, in 1H 2023 compared to a year ago. Its FCF turned significantly positive from a negative FCF a year ago. Debt-to-equity (0.44x) remained nearly unchanged from a quarter ago. You may read more about the company in our previous article here.

Thanks for reading the BKR take three, designed to give you three critical takeaways from BKR’s earnings report. Soon we will present a second update on BKR earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.