Baker Hughes Co

Previous wording

Baker Hughes Company ("Baker Hughes," "the Company," "we," "us," or "our") is an energy technology company with a broad and diversified portfolio of technologies and services that spans the energy and industrial value chain. We conduct business in more than 120 countries and employ approximately 57,000 employees. We operate through our two business segments: Oilfield Services & Equipment ("OFSE") and Industrial & Energy Technology ("IET"). We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments, as well as broader industrial and new energy markets.

Current wording

Baker Hughes Company ("Baker Hughes," "the Company," "we," "us," or "our") is an energy technology company with a broad and diversified portfolio of technologies and services that span the energy and industrial value chain. We conduct business in more than 120 countries and employ approximately 57,000 employees. We operate through our two business segments: Oilfield Services & Equipment ("OFSE") and Industrial & Energy Technology ("IET"). We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments, as well as broader industrial and new energy markets.

Previous wording

As we look to the fourth quarter of 2024 and into 2025, we remain positive on the global gas outlook while the global oil outlook is uncertain. Based on the current macroeconomic and geopolitical environments, we expect 2025 global upstream spending to be similar to 2024. We maintain our expectation for producers to shift spending towards the optimization of mature assets and for continued strength in natural gas.

Current wording

As we look to the rest of 2025, we remain positive on the global natural gas outlook while we expect the global oil outlook to soften.

Previous wording

As our journey of transformation continues, we have made progress in our efforts to improve efficiencies and modernize how the business operates. The business has undertaken significant structural changes and we see the operating benefits coming through in the margin performance.

Current wording

As part of our journey of transformation, we continued to undertake significant structural changes. We have progressed on our efforts to improve efficiencies and modernize how the business operates, and those benefits have translated into higher margin performance.

Previous wording

Baker Hughes remains committed to a flexible capital allocation policy that balances returning cash to shareholders and investing in growth opportunities. In the third quarter of 2024, we returned a total of $361 million to shareholders in the form of dividends and share repurchases.

Current wording

Baker Hughes remains committed to a flexible capital allocation policy that balances returning cash to shareholders and investing in growth opportunities. We increased our quarterly dividend in the first quarter of 2025 by two cents to $0.23 per share. In the first quarter of 2025, we returned a total of $417 million to shareholders in the form of dividends and share repurchases.

Previous wording

Our business is exposed to a number of macro factors, which influence our outlook and expectations given the current volatile conditions in the industry. All of our outlook expectations are purely based on the market as we see it today and are subject to changing conditions in the industry.

Current wording

Our business is exposed to a number of macro factors, which influence our outlook and expectations given the current macroeconomic uncertainty and continued volatile conditions in the industry. All of our outlook expectations are purely based on the market as we see it today and are subject to changing conditions in the industry.

Previous wording

We have other businesses in our portfolio that are more correlated with various industrial metrics, including global GDP growth. We also have businesses within our portfolio that are exposed to new energy solutions, specifically focused around reducing carbon emissions of the energy and broader industry, including: hydrogen; geothermal; carbon capture, utilization and storage; energy storage; clean power; and emissions abatement solutions. We expect to see continued growth in these global businesses as new energy solutions become a more prevalent part of the broader energy mix.

Current wording

We also expect to see continued growth in new energy solutions specifically focused around reducing carbon emissions of the energy and broader industry, including: hydrogen; geothermal; carbon capture, utilization and storage; energy storage; clean power; and emissions abatement solutions.

Previous wording

Overall, we believe our portfolio is well positioned to compete across the energy value chain and deliver comprehensive solutions for our customers. We remain optimistic about the long-term economics of the oil and gas industry, but we are continuing to operate with flexibility. Over time, we believe the world's demand for energy will continue to rise, and that hydrocarbons will play a major role in meeting the world's energy needs for the foreseeable future. As such, we remain focused on delivering innovative, low-emission, and cost-effective solutions that deliver step changes in operating and economic performance for our customers.

Current wording

Overall, we believe our portfolio is well positioned to compete across the energy value chain and deliver comprehensive solutions for our customers. Over time, we believe the world's demand for energy will continue to rise, and that hydrocarbons will play a major role in meeting the world's energy needs for the foreseeable future. As such, we remain focused on delivering innovative, low-emission, and cost-effective solutions that deliver step changes in operating and economic performance for our customers.

Previous wording

We believe we have an important role to play in society as an industry leader and partner. We view the area of environmental, social, and governance as a key lever to transform the performance of our Company and our industry. In January 2019, we made a commitment to reduce Scope 1 and 2 carbon dioxide equivalent emissions from our operations by 50% by 2030 and achieve net-zero emissions by 2050. We continue to make progress on emissions reductions, and reported in our 2023 Corporate Sustainability Report a 28.3% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions as compared to our 2019 base year.

Current wording

We believe we have an important role to play in society as an industry leader and partner. We view the area of environmental, social, and governance as a lever to transform the performance of our Company. In 2019, we made a commitment to reduce Scope 1 and 2 carbon dioxide equivalent emissions from our operations by 50% by 2030 and achieve net-zero emissions by 2050. We continue to make progress on emissions reductions, and reported in our 2023 Corporate Sustainability Report a 28.3% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions as compared to our 2019 base year.

Previous wording

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition, and liquidity position as of and for the three and nine months ended September 30, 2024 and 2023, and should be read in conjunction with our condensed consolidated financial statements and related notes.

Current wording

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition, and liquidity position as of and for the three months ended March 31, 2025 and 2024, and should be read in conjunction with our condensed consolidated financial statements and related notes.

Previous wording

The Baker Hughes rig counts are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active, they consume products and services produced by the oil service industry. Rig count trends are driven by the exploration and development spending by oil and natural gas companies, which in turn is influenced by current and future price expectations for oil and natural gas. The counts may reflect the relative strength and stability of energy prices and overall market activity; however, these counts should not be solely relied on as other specific and pervasive conditions may exist that affect overall energy prices and market activity.

Current wording

Rig counts are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. Therefore, rig counts may act as a leading indicator of market activity and reflect the relative strength of energy prices; however, these counts should not be solely relied on as other specific and pervasive conditions may exist that affect overall energy prices and market activity.

Previous wording

We have been providing rig counts to the public since 1944. We gather all relevant data through our field service personnel, who obtain the necessary data from routine visits to the various rigs, customers, contractors and other outside sources as necessary. We base the classification of a well as either oil or natural gas primarily upon filings made by operators in the relevant jurisdiction. This data is then compiled and distributed to various wire services and trade associations and is published on our website. We believe the counting process and resulting data is reliable; however, it is subject to our ability to obtain accurate and timely information. Rig counts are compiled weekly for the United States of America ("U.S.") and Canada and monthly for all international rigs. Published international rig counts do not include rigs drilling in certain locations such as onshore China because this information is not readily available.

Current wording

Rig counts are compiled weekly for the U.S. and Canada and monthly for all international rigs. Published international rig counts do not include rigs drilling in certain locations such as onshore China because this information is not readily available.

Previous wording

Our condensed consolidated statements of income (loss) display sales and costs of sales in accordance with the Securities and Exchange Commission ("SEC") regulations under which "goods" is required to include all sales of tangible products and "services" must include all other sales, including other service activities. For the amounts shown below, we distinguish between "equipment" and "product services," where product services refer to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of our operations. We refer to "product services" simply as "services" within the Business Environment section of Management's Discussion and Analysis.

Current wording

Our condensed consolidated statements of income (loss) display sales and costs of sales in accordance with the Securities and Exchange Commission ("SEC") regulations under which "goods" is required to include all sales of tangible products and "services" must include all other sales, including other service activities. For the amounts shown below, we distinguish between "equipment" and "product services," where product services refer to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of our operations. We refer to "product services" simply as "services" within Management's Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of our operating segments is primarily evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes and before the following: net interest expense, net other non-operating income (loss), unallocated corporate expenses, significant restructuring plans, impairment and other charges, inventory impairments, and certain gains and losses not allocated to the operating segments.

Current wording

Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of each segment isevaluated based onsegment Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA"), which is defined as income (loss) before income taxes and before the following: net interest expense, costs associated with significant restructuring programs, depreciation and amortization, and unallocated corporate costs and other income (expense).

Previous wording

Volume: Volume is defined as the increase or decrease in products and/or services sold period-over-period excluding the impact of foreign exchange and price. The volume impact on profit is calculated by multiplying the prior period profit rate by the change in revenue volume between the current and prior period. Volume also includes price, which is defined as the change in sales price for a comparable product or service period-over-period and is calculated as the period-over-period change in sales prices of comparable products and services.

Current wording

Volume: Volume is defined as the increase or decrease in products and/or services sold period-over-period excluding the impact of foreign exchange. The volume impact on profit is calculated by multiplying the prior period profit rate by the change in revenue volume between the current and prior period. Volume also includes price, which is defined as the change in sales price for a comparable product or service period-over-period and is calculated as the period-over-period change in sales prices of comparable products and services.

Previous wording

(2)For the three and nine months ended September 30, 2024, total new energy orders incorporates CTS in IET of $0.2 billion and $0.8 billion, respectively.

Current wording

(1)For the three months ended March 31, 2025 and 2024, total new energy orders incorporates CTS in IET.

Previous wording

The Remaining Performance Obligations ("RPO") relate to the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations. As of September 30, 2024, RPO totaled $33.4 billion, of which OFSE totaled $3.2 billion, and IET totaled $30.2 billion.

Current wording

The Remaining Performance Obligations ("RPO") relate to the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations. As of March 31, 2025, RPO totaled $33.2 billion, of which OFSE totaled $2.8 billion, and IET totaled $30.4 billion.

Previous wording

Revenue increased $267 million, or 4%, to $6.9 billion. OFSE increased $12 million and IET increased $254 million.

Current wording

Revenue increased $9 million to $6.4 billion. OFSE decreased $285 million and IET increased $294 million.

Previous wording

We recorded other non-operating income of $134 million in the third quarter of 2024, which included a net gain of $99 million from the change in fair value for certain equity investments. In the third quarter of 2023, we recorded $94 million of other non-operating income. Included in this amount was a net gain of $99 million from the change in fair value for certain equity investments.

Current wording

We recorded other (income) expense, net of $140 million in the first quarter of 2025, which included a net loss of $140 million from the change in fair value of equity securities. In the first quarter of 2024, we recorded $22 million of other income. Included in this amount was a net gain of $52 million from the change in fair value of equity securities.

Previous wording

Net interest expense incurred in the third quarter of 2024 was $55 million, which includes interest income of $18 million. Net interest expense increased $6 million compared to the third quarter of 2023, with lower interest income primarily driven by lower average cash on deposit.

Current wording

Net interest expense incurred in the first quarter of 2025 was $51 million, which includes interest income of $20 million. Net interest expense increased $10 million compared to the first quarter of 2024, with lower interest income primarily driven by lower interest rates.

Previous wording

We recorded income taxes in the third quarter of 2024 and 2023 of $235 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to income in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances, partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances.

Current wording

We recorded income taxes in the first quarter of 2025 and 2024 of $152 million and $178 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is primarily related to income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances. Further, for the period ending March 31, 2024, this impact is partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances.

Previous wording

Segment Revenues and Segment Operating Income

Current wording

Segment Revenues and Segment EBITDA

Previous wording

OFSE revenue of$3,963 million increased $12 million in the third quarter of 2024 compared to the third quarter of 2023, driven by Subsea & Surface Pressure Systems ("SSPS"). From a geographical perspective, international revenue was $2,992 million, an increase of $106 million from the third quarter of 2023, primarily driven by the Europe/CIS/Sub-Saharan Africa regions, partially offset by the Latin America and Middle East/Asia regions. North America revenue was $971 million in the third quarter of 2024, a decrease of $93 million from the third quarter of 2023.

Current wording

OFSE revenue of$3,499 million decreased $285 million in the first quarter of 2025 compared to the first quarter of 2024, driven by lower international and domestic rig count. From a geographical perspective, international revenue was $2,577 million, a decrease of $216 million from the first quarter of 2024, driven by the Europe/CIS/Sub-Saharan Africa regions and Latin America partially offset by the Middle East/Asia region. North America revenue was $922 million in the first quarter of 2025, a decrease of $68 million from the first quarter of 2024.

Previous wording

IET revenue of$8,708 million increased $1,442 million, or 20%, in the first nine months of 2024 compared to the first nine months of 2023. The increase was primarily driven by Gas Technology (predominately in GTE) and, to a lesser extent, in CTS and Industrial Technology.

Current wording

IET revenue of$2,928 million increased $294 million, or 11%, in the first quarter of 2025 compared to the first quarter of 2024. The increase was primarily in GTE and CTS, partially offset by Industrial Technology and GTS.

Previous wording

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and financial flexibility in order to fund the requirements of our business. We continue to maintain solid financial strength and liquidity. At September 30, 2024, we had cash and cash equivalents of $2.7 billion compared to $2.6 billion at December 31, 2023.

Current wording

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and financial flexibility in order to fund the requirements of our business. We continue to maintain solid financial strength and sufficient liquidity. At March 31, 2025, we had cash and cash equivalents of $3.3 billion compared to $3.4 billion at December 31, 2024.

Previous wording

In the U.S. we held cash and cash equivalents of approximately $0.5 billion and $0.6 billion and outside the U.S. of approximately $2.2 billion and $2.0 billion as of September 30, 2024 and December 31, 2023, respectively. A substantial portion of the cash held outside the U.S. at September 30, 2024 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

Current wording

In the U.S. we held cash and cash equivalents of approximately $0.8 billion and $0.6 billion and outside the U.S. of approximately $2.5 billion and $2.8 billion as of March 31, 2025 and December 31, 2024, respectively. A substantial portion of the cash held outside the U.S. at March 31, 2025 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

Previous wording

During the nine months ended September 30, 2024, we dispersed cash to fund a variety of activities including certain working capital needs, capital expenditures, the payment of dividends, and repurchases of our common stock.

Current wording

During the three months ended March 31, 2025, we dispersed cash to fund a variety of activities including certain working capital needs, capital expenditures, the payment of dividends, and repurchases of our common stock.

Previous wording

Cash flows provided by (used in) each type of activity were as follows for the nine months ended September 30:

Current wording

Cash flows provided by (used in) each type of activity were as follows for the three months ended March 31:

Previous wording

Cash flows provided by operating activities were $2,142 million and $2,130 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Cash flows provided by operating activities were $709 million and $784 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Cash generated from operating activities is primarily driven by net income adjusted for certain noncash items (including depreciation, amortization, gain on equity securities, stock-based compensation cost, deferred tax provision, and the impairment of certain assets).

Current wording

Cash from operating activities is primarily generated from net income or loss adjusted for certain noncash items (including depreciation, amortization, change in fair value of equity securities, stock-based compensation cost, and deferred tax benefit or provision).

Previous wording

For the nine months ended September 30, 2023, net working capital cash generation was $19 million for the nine months ended September 30, 2023, mainly due to strong progress collections on equipment contracts, mostly offset by an increase in receivables and inventory as we built for growth.

Current wording

For the three months ended March 31, 2024, net working capital cash generation was $209 million, mainly due to accounts receivable, accounts payable, and progress collections on equipment contracts, partially offset by an increase in inventory due to growth of the business.

Previous wording

For the nine months ended September 30, 2024, net working capital cash usage was $57 million, mainly due to an increase in inventory and contract assets as we continue to build for growth, partially offset by accounts receivables. Included in the cash flows from operating activities for the nine months ended September 30, 2024 are payments of $187 million made primarily for employee severance as a result of our restructuring activities.

Current wording

Included in the cash flows from operating activities for the three months ended March 31, 2025 and 2024 were payments of $32 million and $75 million, respectively, made primarily for employee severance as a result of our restructuring activities.

Previous wording

Cash flows used in investing activities were $799 million and $503 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Cash flows used in investing activities were $310 million and $269 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Our principal recurring investing activity is the funding of capital expenditures including property, plant, and equipment ("PP&E") and software, to support and generate revenue from operations. Expenditures for capital assets were $925 million and $868 million for the nine months ended September 30, 2024 and 2023, respectively, partially offset by cash flows from the disposal of PP&E of $145 million and $150 million for the nine months ended September 30, 2024 and 2023, respectively. Proceeds from the disposal of assets are primarily related to equipment that was lost-in-hole, predominantly in OFSE, and PP&E no longer used in operations that was sold throughout the period.

Current wording

Our principal recurring investing activity is the funding of capital expenditures including property, plant and equipment ("PP&E") and software, to support and generate revenue from operations. Expenditures for capital assets were $300 million and $333 million for the three months ended March 31, 2025 and 2024, respectively, partially offset by cash flows from the disposal of PP&E of $45 million and $51 million for the three months ended March 31, 2025 and 2024, respectively. Proceeds from the disposal of assets were primarily related to OFSE equipment that was lost-in-hole, and PP&E no longer used in operations that was sold throughout the period.

Previous wording

Cash flows used in financing activities were $1,293 million and $861 million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Cash flows used in financing activities were $502 million and $427 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

During the nine months ended September 30, 2024, we repaid long-term debt of $134 million primarily related to debentures that matured in the second quarter of 2024. We increased our quarterly dividend during the nine months ended September 30, 2024 and 2023 by one cent to $0.21 and $0.20 per share, respectively. We paid dividends of $628 million and $586 million to our Class A shareholders during the nine months ended September 30, 2024 and 2023, respectively.

Current wording

We increased our quarterly dividend during the three months ended March 31, 2025 and 2024 by two cents to $0.23 and one cent to $0.21 per share, respectively. We paid dividends of $229 million and $210 million to our Class A shareholders during the three months ended March 31, 2025 and 2024, respectively.

Previous wording

We repurchased and canceled 15.0 million shares of Class A common stock for a total of $476 million during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, we repurchased and canceled 7.0 million shares of Class A common stock for a total of $219 million.

Current wording

We repurchased and canceled 4.4 million shares of Class A common stock for a total of $188 million during the three months ended March 31, 2025. During the three months ended March 31, 2024, we repurchased and canceled 5.4 million shares of Class A common stock for a total of $158 million.

Previous wording

We currently anticipate making income tax payments in the range of $900 million to $950 million in 2024.

Current wording

Based on our current outlook, we anticipate making income tax payments in the range of $1.0 billion to $1.1 billion in 2025.

Previous wording

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk through working with our customers to restructure their debts. In regards to our primary customer in Mexico, we have not historically had any material write-offs due to uncollectible accounts receivable, nor are these balances currently in dispute. During 2024, we have issued a total of $475 million Credit Default Swaps to financial institutions, which were used to support borrowings for this customer, the proceeds from which were used to repay outstanding receivables.

Current wording

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk through working with our customers to restructure their debts. With regard to our primary customer in Mexico, there have not historically been any material losses due to uncollectible accounts receivable, nor are any such balances currently in dispute. As of March 31, 2025 and December 31, 2024, the Company had issued credit default swaps ("CDS") totaling $775 million and $553 million, respectively, to third-party financial institutions. The CDS relate to borrowings provided by these financial institutions to our primary customer in Mexico who utilized these borrowings to pay certain of the Company's outstanding receivables. The total notional amount remaining on the issued CDS was $556 million and $412 million as of March 31, 2025 and December 31, 2024, respectively, which will reduce each month through September 2026 as the customer repays the borrowings. As of March 31, 2025, the fair value of these derivative liabilities is not material.

Previous wording

A customer's failure or delay in payment could have a material adverse effect on our short-term liquidity and results of operations. Our gross customer receivables in the U.S. were 15% as of September 30, 2024. No other country accounted for more than 10% of our gross customer receivables at this date.

Current wording

A customer's failure or delay in payment could have a material adverse effect on our short-term liquidity and results of operations. Our gross customer receivables were 16% in the U.S. and 11% in Saudi Arabia as of March 31, 2025. No other country accounted for more than 10% of our gross customer receivables at this date.

Previous wording

International operations: Our cash that is held outside the U.S. is 83% of the total cash balance as of September 30, 2024. Depending on the jurisdiction or country where this cash is held, we may not be able to use this cash quickly and efficiently due to exchange or cash controls that could make it challenging. As a result, our cash balance may not represent our ability to quickly and efficiently use this cash.

Current wording

International operations: Our cash that is held outside the U.S. is 77% of the total cash balance as of March 31, 2025. Depending on the jurisdiction or country where this cash is held, we may not be able to use this cash quickly and efficiently due to exchange or cash controls that could make it challenging. As a result, our cash balance may not represent our ability to quickly and efficiently use this cash.