Baker Hughes (BHI) Tops Q1 EPS by 17c

Baker Hughes (NYSE: BHI) reported Q1 EPS of ($0.04), $0.17 better than the analyst estimate of ($0.21). Revenue for the quarter came in at $2.3 billion versus the consensus estimate of $2.27 billion.

• Revenue of $2.3 billion for the quarter, down 6% sequentially and 15% year-over-year
• GAAP net loss per share of $0.30 for the quarter includes $0.26 per share of adjusting items
• Adjusted EBITDA (non-GAAP measure) was $309 million for the quarter, up 16% sequentially

“Baker Hughes delivered another sequential quarter of improved adjusted operating profit, despite industry headwinds in certain market segments,” said Martin Craighead, Baker Hughes Chairman and Chief Executive Officer.

“In North America we grew our well construction onshore business, particularly drill bits and rotary steerable systems. However, this growth was more than offset by the deconsolidation of the North America onshore pressure pumping business and reduced customer spending in the Gulf of Mexico. Revenue for our upstream chemicals business, which represents approximately one-quarter of our North America revenue, grew in line with production volumes, and is poised for additional growth as production increases.

“While the onshore rig count increase in North America has been more robust than many had expected, the industry is still working to absorb excess service capacity. As this capacity is being consumed, we have seen labor and materials cost inflation in select product lines and basins. For most drilling-related product lines, with the demand growth we experienced this quarter, we believe we are on the cusp of a broader pricing recovery.

“As expected, our international revenues declined as a result of year-end sales not repeating, seasonal activity reductions, and price deterioration. The decline was more pronounced in the offshore markets as a result of ongoing customer spending reductions.

“Looking forward to the rest of the year, we believe that the North America onshore market will continue to grow and service capacity will continue to be absorbed. For international onshore markets, activity has bottomed and we expect it will remain stable, with a few pockets of modest growth. And, while we expect there to be headwinds offshore throughout the rest of 2017, we are winning in the right places, as evidenced by our recent tender awards.

“In closing, with regard to the pending GE Oil & Gas combination, I am pleased with the progress to date, and I am confident that the new Baker Hughes will be the provider of choice that can uniquely combine innovative physical and digital solutions to deliver the efficiency and productivity gains that customers are asking for. With the benefits and opportunities that this transaction will create for our customers, shareholders and employees, my expectations for what this transformational combination will achieve has continued to grow as we move closer to completing it in mid-2017.”

For earnings history and earnings-related data on Baker Hughes (BHI) click here.

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