BAKER HUGHES COMPANY Investor Overview
March 2024
1 Copyright 2024 Baker Hughes Company. All rights reserved.
2
This presentation (and oral statements made regarding the subjects of this release) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (each a "forward-looking statement"). The words "anticipate," "believe," "ensure," "expect," "if," "intend,"
"estimate," "project," "foresee," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "potential," "would," "may," "probable,"
"likely," and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. These forward-looking statements are also affected by the risk factors described in the Company's annual report on Form 10- K for the year ended December 31, 2023 and those set forth from time to time in other filings with the Securities and Exchange
Commission ("SEC"). These documents are available through the Company's website at: www.investors.bakerhughes.com or
through the SEC's Electronic Data Gathering and Analysis Retrieval ("EDGAR") system at: www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement except as required by law.
The Company presents its financial results in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"); however, management believes that using additional non-U.S. GAAP measures will enhance the evaluation of the profitability of the Company and its ongoing operations. "These non-U.S. GAAP measures are not measures of financial performance in accordance with U.S. GAAP and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to GAAP measures. You should be aware that our presentation of those measures may not be comparable to similarly titled measures used by other companies." See the Appendix of this presentation for a reconciliation of U.S. GAAP to non-U.S. GAAP financial measures.
Copyright 2024 Baker Hughes Company. All rights reserved.
BAKER HUGHES OVERVIEW | 3 |
We take energy forward- making it safer, cleaner, and more efficient for people and the planet
120+
Countries
199
Perfect HSE days in 2023
~58,000
Employees
$658M
R&D spend in 2023
$25.5B
Revenues in
2023
AA
ESG rating by
MSCI
Copyright 2024 Baker Hughes Company. All rights reserved. Note all data as of December 31, 2023
BAKER HUGHES CAPABILITIES | 4 | |
Leading Energy
Technology Company
Baker Hughes has a diverse portfolio of
technologies & services across the energy landscape
OFSE
OFSE technology leader … ~70% international, ~40% offshore & ~35% production-weighted1
Expertise in … directional drilling … well construction … production maintenance and enhancement
SOLVE
Customer and society
challenges
SERVICE | SOLUTIONS | DEVELOP | ||||||
Asset | Build and | |||||||
servicing & | install | |||||||
support/ | ENERGY | Geothermal | Industrial | INDUSTRIAL | on-site | |||
service | Clean power | solutions | ||||||
delivery | solutions | Industrial | ||||||
Hydrogen | products | |||||||
CCUS | AN ENERGY | |||||||
NEW | TECHNOLOGY | |||||||
COMPANY | ||||||||
OFSE | Industrial | |||||||
Products | ||||||||
Gas Technology | ||||||||
and Services | ||||||||
OPTIMIZE | ENERGY INNOVATE | |||||||
Systems | Research & develop | |||||||
Digital enablement, | ||||||||
automation & process | new technologies | |||||||
improvement | ||||||||
Providing equipment
& solutions
to help solve the world's greatest energy challenges
IET
Leading driver & compression technology for LNG, upstream & industrial applications
Expertise in compression & power
generation equipment & aftermarket services … condition monitoring & inspection
New energy … leveraging subsurface to surface portfolio to provide long-term growth in geothermal & CO2 storage
New energy … existing core technologies enable opportunities in carbon capture, hydrogen, clean power solutions and emissions abatement
Copyright 2024 Baker Hughes Company. All rights reserved. 1. As of December 31, 2023
OUR STRATEGY | 5 |
Our strategy is delivering
Strong EBITDA growth over the last four years
BKR EBITDA MARGIN RATE PROGRESS
14.8%
14.1%
13.1%
11.4%
15.6%1
Well-defined strategy over the next three time horizons to drive differentiated growth
Expanding commercial opportunities that
provide growth into 2030 and beyond
Growing IET equipment installed base, resulting in margin-accretive growth
Operational upside and continuous cost improvement to drive margin & returns higher
Building more durable earnings and free cash flow across cycles
2020 | 2021 | 2022 | 2023 | 2024E |
Copyright 2024 Baker Hughes Company. All rights reserved.
EBITDA margin is a non-GAAP measure - see appendix for GAAP to non-GAAP reconciliations Note 1: Implied EBITDA margin rate mid-point of 2024 guidance range
OUR STRATEGY | 6 |
Executing our strategy across three time horizons
Delivering on near-term targets while laying the foundations for long-term success
Market
landscape
Transform
the core
Invest for
growth
Position for
new frontiers
HORIZON ONE | HORIZON TWO | HORIZON THREE |
THROUGH 2025 | MID TO LATE 2020s | TO 2030 AND BEYOND |
Multi-year growth cycles underway | Growth moderates in upstream- | Decarbonization becomes the |
in LNG and upstream | new energy starts to scale | prerequisite for all energy projects |
Transforming our business and | Strong aftermarket services growth driven | Leveraging current capabilities in new |
simplifying the way we work | by increasing LNG installed base | ways as traditional markets mature |
Optimizing the portfolio and | Scaling digital offerings as customers | Significant recurring revenue from |
focus on efficiencies and emissions | ||
integrating recent acquisitions | digital and services franchises | |
reductions | ||
Leveraging world class capabilities to | Successful commercialization of | New energy inflects, driving significant |
progress digital and new energy tech | digital and new energy technology | order growth across decarb offerings |
As the energy transition becomes all encompassing, we expect our customer base to diversify
significantly, and addressable markets for our solutions to expand rapidly
Copyright 2024 Baker Hughes Company. All rights reserved.
OFSE PORTFOLIO OVERVIEW | 7 |
Oilfield Services & Equipment (OFSE)
2023 REVENUE SPLIT
WELL | COMPLETIONS, INTERVENTION, | PRODUCTION | SUBSEA & SURFACE |
CONSTRUCTION | & MEASUREMENTS | SOLUTIONS | PRESSURE SYSTEMS |
$4.4B | $4.2B | $3.9B | $2.9B |
Drilling Services | Completions & Well Intervention | Artificial Lift Systems | Subsea Projects & Services |
Drill Bits | Wireline Services | Oilfield & Industrial Chemicals | Flexible Pipe Systems |
Drilling & Completion Fluids | Pressure Pumping | Surface Pressure Control | |
OFSE EBITDA, $B2
2.8-3.0
2.6
2.0
1.7
2021 2022 2023 2024E
Copyright 2024 Baker Hughes Company. All rights reserved.
- Estimated split
- Note: EBITDA is a non-GAAP measures - see appendix for GAAP to non-GAAP reconciliations.
2023 REVENUE | |
Middle East/Asia | North America |
27% | |
38% | $15.4B ~40% Offshore |
$15.4B | |
18% | Onshore ~60% |
Latin America | |
17% | |
Europe/CIS/SSA | |
REGION | ONSHORE VS. OFFSHORE1 |
OFSE MACRO OUTLOOK | 8 | |
Upstream growth to continue
Pace moderating, but strong fundamentals support continued international growth
THEMES
2024 international outlook unchanged
Continue to expect high single-digit growth in '24. Contemplates OPEC+ cuts remaining for FY'24
Saudi MSC change focused on oil growth spend
No impact on 2024 - BKR set to benefit from increased new energy and gas infrastructure spend
North America remains subdued
Continue to expect market to be down low-to-mid- single digits in '24 - sharp declines in gas activity
underway
Robust offshore activity to continue
Expect >300 X-Tree awards annually for the next 2-3 years
UPSTREAM CAPEX OUTLOOK1
+2% | |||
800 | CAGR | ||
700 | |||
US$B | 600 | ||
500 | |||
400 | |||
300 | |||
200 | |||
100 | |||
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
SSA
RCIS
APAC
EUR
LATAM
MENAT
NAM
Copyright 2024 Baker Hughes Company. All rights reserved.
1. Source: Historical Data - Wood Mackenzie Upstream Capex: Lens Direct. Forecast Data - Baker Hughes Company Estimates. Note CAGR impacted by rebasing to 2023 vs. 2022 and adjustments to regional outlooks.
OFSE STRATEGY | 9 |
OFSE's path to 20% EBITDA margins by 2025
STRATEGIC IMPERATIVES
Drive toward cost leadership
- Organization transformation
- Optimized supply chain and service delivery
- Disciplined spending and value-based capital allocation
Accelerate customer value growth
- Advance digital solutions (Leucipa & Corva)
- Expand integrated and mature assets solutions
- Invest in technology biased toward sustainability and reduced emissions
Grow profitably in attractive markets
- Target growth in high-value markets (international & offshore) and key accounts
- Capture commercial value (price)
- Place selective bets in new energy
Key foundational enabler:
HIGH-PERFORMANCE ORGANIZATION AND CULTURE
Continued near-term EBITDA
margin expansion
Productivity/ | Price | Volume | 20% |
Cost | |||
16.9% | |||
2023 | 2025 |
Financial targets | 20% | 15% |
EBITDA margin | ||
in 20251 | ROIC in 20252 | |
Copyright 2024 Baker Hughes Company. All rights reserved.
- EBITDA margin is a non-GAAP measure - see appendix for GAAP to non-GAAP reconciliations
- ROIC is defined as NOPAT / (non-cash net working capital + PP&E + Goodwill +Intangibles)
IET PORTFOLIO OVERVIEW | 10 |
Industrial & Energy Technology (IET)
GAS TECHNOLOGY
CTS | INDUSTRIAL TECHNOLOGY |
GAS TECHNOLOGY EQUIPMENT (GTE)
$4.2B
World leading turbomachinery franchise
- LNG
- On & Offshore Production
- Downstream
- Other Industrial Applications
GAS TECHNOLOGY SERVICES (GTS)
$2.6B
Structural growth driven by increasing installed base
- Contractual
- Transactional
- Upgrades
CLIMATE TECHNOLOGY | INDUSTRIAL SOLUTIONS1 |
SOLUTIONS (CTS) | |
$0.3B | $1.0B |
CO2 & H2 compression & turbine | Delivering recurring value in a |
expertise | digital ecosystem |
• CCUS | • Condition Monitoring |
• Hydrogen | • Asset Performance Management |
• Clean Power | • Process Optimization |
• Geothermal | • Sensors & Instrumentation |
• Emissions Abatement | |
INDUSTRIAL PRODUCTS
$2.0B
Increasing focus on industrial end markets
- Valves
- Gears
- Inspection
- Industrial & Energy Technology reporting segment-fiscal year 2023 revenue
IET EBITDA $B2
1.65-1.85
1.4 1.3 1.5
2021 2022 2023 2024E
Copyright 2024 Baker Hughes Company. All rights reserved.
- Includes $41M of Nexus Controls revenues which was sold to GE in April 2023
- EBITDA is a non-GAAP measure - see appendix for GAAP to non-GAAP reconciliations
2023 REVENUE | ||||
Upstream | CTS | |||
24% | Downstream | Gas Tech - Equipment | ||
3% | ||||
12% | 42% | |||
Midstream | Power Gen | Industrial Solutions | ||
$10.1B | 3% | 10% | $10.1B | |
11% | ||||
Renewables | ||||
<1% | ||||
LNG | Industrial | Indsutrial Products | Gas Tech - Services | |
14% | 19% | 26% | ||
35% | ||||
End Market | Product Line |
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Disclaimer
Baker Hughes Company published this content on 18 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 March 2024 11:53:06 UTC.
