Canaccord Genuity Morning Coffee on Baker Hughes (BHI): Baked
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Price: $57.68 --0%
Rating Summary:
15 Buy, 20 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
Rating Summary:
15 Buy, 20 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
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Canaccord Genuity Morning Coffee on Baker Hughes (NYSE: BHI): Baked.
Baker Hughes Q4 earnings came in below consensus, sending shares lower on Tuesday. Earnings came in at $1.22 per share, below consensus of $1.32 and Canaccord Genuity Energy Analyst Scott Burk’s estimate of $1.33. Compared to his estimates, the company had substantially lower North America results (-$0.19/share), partly offset by higher international operating income (+$0.04/share) and lower taxes (+$0.02/share). Baker had in-line revenues and worse-than-expected margins in North America, with revenues of $2.82 billion and an operating margin of 18.7% compared to his estimates of $2.83 billion and 23% (and Q3 margins of 22.3%). Revenues and margins increased quarter-over-quarter for all international regions, with the most margin improvement seen in Europe/Africa/CIS (+402 bps vs. Q3). In North America, Baker's pressure pumping product line struggled to keep up with rapid growth, probably exacerbated by integration issues of the relatively new BJ Services business. Baker encountered a lack of availability, cost and transportation of materials such as sand and gel, as well as lower utilization of new equipment and crews added to address growing market needs. As a result, North American margins declined sequentially by 430 bps to 18.7%, well below the ~27% reported by Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB). Management expects to improve utilization and solve the logistics problems by the second half of 2012, implying downside to Burk’s H1/12 estimates.
Baker Hughes Q4 earnings came in below consensus, sending shares lower on Tuesday. Earnings came in at $1.22 per share, below consensus of $1.32 and Canaccord Genuity Energy Analyst Scott Burk’s estimate of $1.33. Compared to his estimates, the company had substantially lower North America results (-$0.19/share), partly offset by higher international operating income (+$0.04/share) and lower taxes (+$0.02/share). Baker had in-line revenues and worse-than-expected margins in North America, with revenues of $2.82 billion and an operating margin of 18.7% compared to his estimates of $2.83 billion and 23% (and Q3 margins of 22.3%). Revenues and margins increased quarter-over-quarter for all international regions, with the most margin improvement seen in Europe/Africa/CIS (+402 bps vs. Q3). In North America, Baker's pressure pumping product line struggled to keep up with rapid growth, probably exacerbated by integration issues of the relatively new BJ Services business. Baker encountered a lack of availability, cost and transportation of materials such as sand and gel, as well as lower utilization of new equipment and crews added to address growing market needs. As a result, North American margins declined sequentially by 430 bps to 18.7%, well below the ~27% reported by Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB). Management expects to improve utilization and solve the logistics problems by the second half of 2012, implying downside to Burk’s H1/12 estimates.
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