Order Booking Inflates As Long-Term Projects Arrive: BKR’s total book-to-bill ratio improved to 1.1x in Q2 2024 compared to 1x in Q1. It received a multi-year contract for workover and plug and abandonment services in Brazil. It also received a contract from Petrobras for seabed centrifugal pumping systems. Azerbaijan signed a joint agreement to employ more than 150 electrical submersible pumps and the automated field production solution. In the IET segment, it received a major Gas Technology Equipment contract for SONATRACH’s Hassi R’ Mel gas field. Plus, it signed a ten-year agreement with Woodside Energy to support LNG operations in Australia.

In the Climate Technology Solutions (or CTS) business, BKR  will supply electric-driven compression and power generation in Asia Pacific. During Q2, it received multiple orders for advanced hydrogen, syngas, and CO2 solutions, among other renewable energy projects.

Revenue And Margin Strengthened In Q2: In the Industrial & Energy Technology segment, revenues increased by 19% quarter-over-quarter, while operating profit went up by 34%. The revenue visibility was also encouraging, as order booking increased by 19% in this segment in Q2. The financial results in the Oilfield Services & Equipment segment also strengthened in Q2. Order booking inflated (12% up) in this segment. Volume growth in the Middle East/Asia and Europe/CIS/Sub-Saharan Africa and improved pricing led to improved results in Q2.

As the performance soared in Q2, the company’s management raised the midpoint of its FY2024 guidance by 5%. Its management also expects a structural improvement in operating margin in the coming years.

Cash Flow Declined; Leverage Improved: BKR’s cash flow from operations decreased by 14% in 1H 2024 compared to a year ago. Its FCF decreased by 31% during this period. Debt-to-equity (0.39x) improved slightly compared to December 31, 2023. It repurchased shares worth $166 million in Q2. 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.