UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________to__________

Commission File Number 1-09397


Baker Hughes Holdings LLC

(Exact name of registrant as specified in its charter)


Delaware		76-0207995
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

17021 Aldine Westfield
Houston,	Texas	77073-5101
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (713) 439-8600

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
5.125% Senior Notes due 2040	-	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of ~~April~~July 13, 2023, the registrant had outstanding ~~1,012,362,186~~1,009,653,944 common units. None of the common units are publicly traded.

Baker Hughes Holdings LLC

Table of Contents


		Page No.
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income (Loss) (Unaudited) - Three and six months ended ~~March 31,~~June 30, 2023 and 2022	1

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three and six months ended ~~March 31,~~June 30, 2023 and 2022	2

	Condensed Consolidated Statements of Financial Position (Unaudited) - ~~March 31,~~June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Changes in Members' Equity (Unaudited) - Three and six months ended ~~March 31,~~June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Three~~Six months ended ~~March 31,~~June 30, 2023 and 2022	56

	Notes to Unaudited Condensed Consolidated Financial Statements	67

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3336

Item 4.	Controls and Procedures	3336

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	3537

Item 1A.	Risk Factors	3537

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3537

Item 3.	Defaults Upon Senior Securities	3537

Item 4.	Mine Safety Disclosures	3537

Item 5.	Other Information	3537

Item 6.	Exhibits	3538

	Signatures	3639

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | i

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Income (Loss)

(Unaudited)


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per unit amounts)	(In millions, except per unit amounts)	2023		2022			(In millions, except per unit amounts)	2023		2022		2023		2022
Revenue:	Revenue:						Revenue:
Sales of goods	Sales of goods	$	3,484	$	2,809		Sales of goods	$	3,793	$	2,817	$	7,276	$	5,626
Sales of services	Sales of services	2,232		2,026			Sales of services	2,522		2,230		4,754		4,256
Total revenue	Total revenue	5,716		4,835			Total revenue	6,315		5,047		12,030		9,882

Costs and expenses:	Costs and expenses:						Costs and expenses:
Cost of goods sold	Cost of goods sold	2,982		2,366			Cost of goods sold	3,255		2,495		6,237		4,862
Cost of services sold	Cost of services sold	1,585		1,499			Cost of services sold	1,749		1,582		3,332		3,081
Selling, general and administrative	Selling, general and administrative	655		621			Selling, general and administrative	695		624		1,351		1,245

Restructuring, impairment and other	Restructuring, impairment and other	56		70			Restructuring, impairment and other	102		371		158		441
Total costs and expenses	Total costs and expenses	5,278		4,556			Total costs and expenses	5,801		5,072		11,078		9,629
Operating income		438		279
Operating income (loss)							Operating income (loss)	514		(25)		952		253
Other non-operating income (loss), net	Other non-operating income (loss), net	386		(28)			Other non-operating income (loss), net	158		(570)		544		(597)
Interest expense, net	Interest expense, net	(64)		(64)			Interest expense, net	(58)		(60)		(122)		(124)
Income before income taxes		760		187
Income (loss) before income taxes							Income (loss) before income taxes	614		(655)		1,374		(468)
Provision for income taxes	Provision for income taxes	(141)		(95)			Provision for income taxes	(171)		(181)		(312)		(276)
Net income		619		92
Net income (loss)							Net income (loss)	443		(836)		1,062		(744)
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	5		5			Less: Net income attributable to noncontrolling interests	4		7		10		12
Net income attributable to Baker Hughes Holdings LLC		$	614	$	87
Net income (loss) attributable to Baker Hughes Holdings LLC							Net income (loss) attributable to Baker Hughes Holdings LLC	$	439	$	(843)	$	1,052	$	(756)

Cash distribution per common unit	Cash distribution per common unit	$	0.19	$	0.18		Cash distribution per common unit	$	0.19	$	0.18	$	0.38	$	0.36

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 1

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2023		2022			(In millions)	2023		2022		2023		2022
Net income		$	619	$	92
Net income (loss)							Net income (loss)	$	443	$	(836)	$	1,062	$	(744)
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	5		5			Less: Net income attributable to noncontrolling interests	4		7		10		12
Net income attributable to Baker Hughes Holdings LLC		614		87
Net income (loss) attributable to Baker Hughes Holdings LLC							Net income (loss) attributable to Baker Hughes Holdings LLC	439		(843)		1,052		(756)
Other comprehensive income (loss):	Other comprehensive income (loss):						Other comprehensive income (loss):

Investment securities							Investment securities	1		—		1		—
Foreign currency translation adjustments	Foreign currency translation adjustments	(61)		17			Foreign currency translation adjustments	230		(170)		168		(153)
Cash flow hedges	Cash flow hedges	(1)		1			Cash flow hedges	11		—		11		1
Benefit plans	Benefit plans	7		8			Benefit plans	(10)		24		(4)		32
Other comprehensive income (loss)	Other comprehensive income (loss)	(55)		26			Other comprehensive income (loss)	232		(146)		176		(120)
Less: Other comprehensive loss attributable to noncontrolling interests	Less: Other comprehensive loss attributable to noncontrolling interests	—		(1)			Less: Other comprehensive loss attributable to noncontrolling interests	—		(1)		—		(2)
Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC	Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC	(55)		27			Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC	232		(145)		176		(118)
Comprehensive income		564		118
Comprehensive income (loss)							Comprehensive income (loss)	675		(982)		1,238		(864)
Less: Comprehensive income attributable to noncontrolling interests	Less: Comprehensive income attributable to noncontrolling interests	5		4			Less: Comprehensive income attributable to noncontrolling interests	4		6		10		10
Comprehensive income attributable to Baker Hughes Holdings LLC		$	559	$	114
Comprehensive income (loss) attributable to Baker Hughes Holdings LLC							Comprehensive income (loss) attributable to Baker Hughes Holdings LLC	$	671	$	(988)	$	1,228	$	(874)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 2

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Financial Position

(Unaudited)


(In millions)	(In millions)	March 31, 2023		December 31, 2022		(In millions)	June 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,413	$	2,485	Cash and cash equivalents	$	2,804	$	2,485
Current receivables, net	Current receivables, net	6,376		5,974		Current receivables, net	6,476		5,974
Inventories, net	Inventories, net	4,786		4,587		Inventories, net	4,957		4,587
All other current assets	All other current assets	1,894		1,559		All other current assets	1,626		1,559
Total current assets	Total current assets	15,469		14,605		Total current assets	15,863		14,605
Property, plant and equipment (net of accumulated depreciation of $5,258 and $5,121)		4,513		4,538
Property, plant and equipment (net of accumulated depreciation of $5,491 and $5,121)						Property, plant and equipment (net of accumulated depreciation of $5,491 and $5,121)	4,723		4,538
Goodwill	Goodwill	5,677		5,691		Goodwill	5,835		5,691
Other intangible assets, net	Other intangible assets, net	4,123		4,180		Other intangible assets, net	4,124		4,180
Contract and other deferred assets	Contract and other deferred assets	1,603		1,503		Contract and other deferred assets	1,776		1,503
All other assets	All other assets	3,067		2,998		All other assets	3,229		2,998
Deferred income taxes	Deferred income taxes	663		657		Deferred income taxes	670		657
Total assets	Total assets	$	35,115	$	34,172	Total assets	$	36,220	$	34,172
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	4,263	$	4,298	Accounts payable	$	4,154	$	4,298
Short-term and current portion of long-term debt	Short-term and current portion of long-term debt	684		677		Short-term and current portion of long-term debt	845		677
Progress collections and deferred income	Progress collections and deferred income	4,434		3,822		Progress collections and deferred income	5,101		3,822
All other current liabilities	All other current liabilities	2,185		2,235		All other current liabilities	2,200		2,235
Total current liabilities	Total current liabilities	11,566		11,032		Total current liabilities	12,300		11,032
Long-term debt	Long-term debt	5,975		5,980		Long-term debt	5,848		5,980
Deferred income taxes	Deferred income taxes	129		135		Deferred income taxes	147		135
Liabilities for pensions and other postretirement benefits	Liabilities for pensions and other postretirement benefits	932		960		Liabilities for pensions and other postretirement benefits	968		960
All other liabilities	All other liabilities	1,421		1,406		All other liabilities	1,419		1,406
Members' Equity:	Members' Equity:					Members' Equity:

Members' capital, common units, 1,012 and 1,006 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		34,207		34,336
Members' capital, common units, 1,009 and 1,006 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively						Members' capital, common units, 1,009 and 1,006 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	33,981		34,336
Retained loss	Retained loss	(16,224)		(16,837)		Retained loss	(15,785)		(16,837)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,026)		(2,971)		Accumulated other comprehensive loss	(2,795)		(2,971)
Baker Hughes Holdings LLC equity	Baker Hughes Holdings LLC equity	14,957		14,528		Baker Hughes Holdings LLC equity	15,401		14,528
Noncontrolling interests	Noncontrolling interests	135		131		Noncontrolling interests	137		131
Total equity	Total equity	15,092		14,659		Total equity	15,538		14,659
Total liabilities and equity	Total liabilities and equity	$	35,115	$	34,172	Total liabilities and equity	$	36,220	$	34,172

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 3

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Changes in Members' Equity

(Unaudited)

(In millions, except per unit amounts) Members' Capital Retained
Loss Accumulated
Other
Comprehensive
Loss Non-
controlling
Interests Total Equity
Balance at December 31, 2022 $ 34,336 $ (16,837) $ (2,971) $ 131 $ 14,659
Comprehensive income (loss):
Net income 614 5 619
Other comprehensive loss (55) (55)
Regular cash distribution to Members ($0.19 per unit) (192) (192)
Baker Hughes stock-based compensation cost 49 49
Other 14 (1) (1) 12
Balance at March 31, 2023 $ 34,207 $ (16,224) $ (3,026) $ 135 $ 15,092


(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at December 31, 2022	$	34,336	$	(16,837)	$	(2,971)	$	131	$	14,659
Comprehensive income:
Net income			1,052				10		1,062
Other comprehensive income					176				176
Regular cash distribution to Members ($0.38 per unit)	(384)								(384)
Repurchase and cancellation of common units	(99)								(99)
Baker Hughes Company stock-based compensation cost	98								98
Other	30						(4)		26
Balance at June 30, 2023	$	33,981	$	(15,785)	$	(2,795)	$	137	$	15,538

(In millions, except per unit amounts) Members' Capital Retained
Loss Accumulated
Other
Comprehensive
Loss Non-
controlling
Interests Total Equity
Balance at December 31, 2021 $ 35,589 $ (16,311) $ (2,691) $ 139 $ 16,726
Comprehensive income:
Net income 87 5 92
Other comprehensive income (loss) 27 (1) 26
Regular cash distribution to Members ($0.18 per unit) (185) (185)
Repurchase and cancellation of common units (236) (236)
Baker Hughes stock-based compensation cost 52 52
Other 45 (7) 38
Balance at March 31, 2022 $ 35,265 $ (16,224) $ (2,664) $ 136 $ 16,513


(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at March 31, 2023	$	34,207	$	(16,224)	$	(3,026)	$	135	$	15,092
Comprehensive income:
Net income			439				4		443
Other comprehensive income					232				232
Regular cash distribution to Members ($0.19 per unit)	(192)								(192)
Repurchase and cancellation of common units	(99)								(99)
Baker Hughes Company stock-based compensation cost	49								49
Other	16				(1)		(2)		13
Balance at June 30, 2023	$	33,981	$	(15,785)	$	(2,795)	$	137	$	15,538

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 4

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Changes in Members' Equity

(Unaudited)


(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at December 31, 2021	$	35,589	$	(16,311)	$	(2,691)	$	139	$	16,726
Comprehensive loss:
Net income (loss)			(756)				12		(744)
Other comprehensive loss					(118)		(2)		(120)
Regular cash distribution to Members ($0.36 per unit)	(369)								(369)


Repurchase and cancellation of common units	(462)								(462)
Baker Hughes Company stock-based compensation cost	102								102

Other	63						(41)		22
Balance at June 30, 2022	$	34,923	$	(17,067)	$	(2,809)	$	108	$	15,155


(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at March 31, 2022	$	35,265	$	(16,224)	$	(2,664)	$	136	$	16,513
Comprehensive loss:
Net income (loss)			(843)				7		(836)
Other comprehensive loss					(145)		(1)		(146)
Regular cash distribution to Members ($0.18 per unit)	(184)								(184)


Repurchase and cancellation of common units	(226)								(226)
Baker Hughes Company stock-based compensation cost	50								50

Other	18						(34)		(16)
Balance at June 30, 2022	$	34,923	$	(17,067)	$	(2,809)	$	108	$	15,155

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 45

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Three Months Ended March 31,					Six Months Ended June 30,
(In millions)	(In millions)	2023		2022		(In millions)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income		$	619	$	92
Adjustments to reconcile net income to net cash flows from operating activities:
Net income (loss)						Net income (loss)	$	1,062	$	(744)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:						Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	269		277		Depreciation and amortization	545		551
Gain on equity securities		(392)		(11)
Provision for deferred income taxes		23		12
(Gain) loss on equity securities						(Gain) loss on equity securities	(540)		112
Provision (benefit) for deferred income taxes						Provision (benefit) for deferred income taxes	57		(34)
Stock-based compensation cost	Stock-based compensation cost	49		52		Stock-based compensation cost	98		102

Loss on assets held for sale						Loss on assets held for sale	—		426

Inventory impairment	Inventory impairment	18		—		Inventory impairment	33		31

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Current receivables	Current receivables	(401)		(264)		Current receivables	(434)		(412)
Inventories	Inventories	(265)		(205)		Inventories	(332)		(408)
Accounts payable	Accounts payable	43		74		Accounts payable	(156)		185
Progress collections and deferred income	Progress collections and deferred income	639		280		Progress collections and deferred income	1,223		624
Contract and other deferred assets	Contract and other deferred assets	(148)		(38)		Contract and other deferred assets	(236)		(122)
Other operating items, net	Other operating items, net	8		(191)		Other operating items, net	(47)		89
Net cash flows from operating activities	Net cash flows from operating activities	462		78		Net cash flows from operating activities	1,273		400
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Expenditures for capital assets	Expenditures for capital assets	(310)		(268)		Expenditures for capital assets	(587)		(494)
Proceeds from disposal of assets	Proceeds from disposal of assets	46		91		Proceeds from disposal of assets	87		143

Proceeds from business dispositions						Proceeds from business dispositions	293		—
Net cash paid for acquisitions						Net cash paid for acquisitions	(282)		(86)
Other investing items, net	Other investing items, net	35		(89)		Other investing items, net	75		7
Net cash flows used in investing activities	Net cash flows used in investing activities	(229)		(266)		Net cash flows used in investing activities	(414)		(430)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net repayments of debt		(5)		(11)

Distributions to Members	Distributions to Members	(192)		(185)		Distributions to Members	(384)		(369)

Repurchase of common units	Repurchase of common units	—		(236)		Repurchase of common units	(99)		(462)

Other financing items, net	Other financing items, net	(53)		(37)		Other financing items, net	(18)		(37)
Net cash flows used in financing activities	Net cash flows used in financing activities	(250)		(469)		Net cash flows used in financing activities	(501)		(868)
Effect of currency exchange rate changes on cash and cash equivalents	Effect of currency exchange rate changes on cash and cash equivalents	(55)		1		Effect of currency exchange rate changes on cash and cash equivalents	(39)		(20)
Decrease in cash and cash equivalents		(72)		(656)
Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	319		(919)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	2,485		3,843		Cash and cash equivalents, beginning of period	2,485		3,843
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	2,413	$	3,187	Cash and cash equivalents, end of period	$	2,804	$	2,924
Supplemental cash flows disclosures:	Supplemental cash flows disclosures:					Supplemental cash flows disclosures:
Income taxes paid, net of refunds	Income taxes paid, net of refunds	$	163	$	130	Income taxes paid, net of refunds	$	316	$	282
Interest paid	Interest paid	$	50	$	48	Interest paid	$	157	$	140

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 56

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

Baker Hughes Holdings LLC, a Delaware limited liability company ("the Company", "BHH LLC", "we", "us", or "our") and the successor to Baker Hughes Incorporated ("BHI"), is an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain. BHH LLC is a Securities and Exchange Commission ("SEC") Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S." and such principles, "U.S. GAAP") and pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Annual Report").

In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state our results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis. The condensed consolidated financial statements include the accounts of BHH LLC and all of its subsidiaries and affiliates which it controls or variable interest entities for which we have determined that we are the primary beneficiary. All intercompany accounts and transactions have been eliminated.

In the Company's financial statements and notes, certain prior year amounts have been reclassified to conform to the current year presentation. In the notes to the unaudited condensed consolidated financial statements, all dollar and common unit amounts in tabulations are in millions of dollars and units, respectively, unless otherwise indicated. Certain columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Please refer to "Note 1. Basis of Presentation and Summary of Significant Accounting Policies," to our consolidated financial statements from our 2022 Annual Report for the discussion of our significant accounting policies.

~~Cash and Cash Equivalents~~

As of March 31, 2023 and December 31, 2022, we had $549 million and $605 million, respectively, of cash held in bank accounts that cannot be readily released, transferred or otherwise converted into a currency that is regularly transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these jurisdictions, and we do not currently anticipate a need to transfer these funds to the U.S.

Supply Chain Finance Programs

On January 1, 2023, we adopted Financial Accounting Standards Board ~~(“FASB”~~("FASB") Accounting Standards Update ~~(“ASU”~~("ASU") No. ASU 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which enhances the transparency of supplier finance programs and requires certain disclosures for a buyer in a supplier finance program.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 6~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Under the supply chain finance ~~(“SCF”~~("SCF") programs, administered by a third party, our suppliers are given the opportunity to sell receivables from us to participating financial institutions at their sole discretion at a rate that leverages our credit rating and thus might be more beneficial to our suppliers. Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 7

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

As of ~~March 31,~~June 30, 2023 and December 31, 2022, ~~$316~~$280 million and $275 million of SCF program liabilities are recorded in ~~“Accounts payable”~~"Accounts payable" in our condensed consolidated statements of financial position, respectively, and reflected as cash flow from operating activities in our condensed consolidated statements of cash flows when settled.

NEW ACCOUNTING STANDARDS TO BE ADOPTED

New accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

NOTE 2. CURRENT RECEIVABLES

Current receivables are comprised of the following:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
Customer receivables	Customer receivables	$	5,264	$	5,083	Customer receivables	$	5,414	$	5,083
Other	Other	1,451		1,232		Other	1,410		1,232
Total current receivables	Total current receivables	6,715		6,315		Total current receivables	6,824		6,315
Less: Allowance for credit losses	Less: Allowance for credit losses	(339)		(341)		Less: Allowance for credit losses	(348)		(341)
Total current receivables, net	Total current receivables, net	$	6,376	$	5,974	Total current receivables, net	$	6,476	$	5,974

Customer receivables are recorded at the invoiced amount. The "Other" category consists primarily of advance payments to suppliers, indirect taxes, related parties, and customer retentions.

NOTE 3. INVENTORIES

Inventories, net of reserves of ~~$383~~$400 million and $396 million as of ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, are comprised of the following:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
Finished goods	Finished goods	$	2,461	$	2,419	Finished goods	$	2,604	$	2,419
Work in process and raw materials	Work in process and raw materials	2,325		2,168		Work in process and raw materials	2,353		2,168

Total inventories, net	Total inventories, net	$	4,786	$	4,587	Total inventories, net	$	4,957	$	4,587

During the three and six months ended ~~March 31,~~June 30, 2023, we recorded inventory impairments of ~~$18~~$15 million ~~predominately~~and $33 million, respectively, primarily in our Oilfield Services & Equipment ("OFSE") ~~segment.~~segment related to exit activities at specific locations. During the three and six months ended June 30, 2022, we recorded inventory impairments of $31 million primarily in our Industrial & Energy Technology ("IET") segment as part of suspending our Russia operations. Charges for inventory impairments are reported in the "Cost of goods sold" caption in the condensed consolidated statements of income (loss). See "Note 16. Restructuring, Impairment, and Other" for further information.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 78

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 4. ~~GOODWILL AND OTHER INTANGIBLE ASSETS~~

~~GOODWILL~~

~~The changes in the carrying value of goodwill are detailed below by segment:~~

Oilfield Services & Equipment Industrial & Energy Technology Total
Balance at December 31, 2021, gross $ 19,531 $ 4,661 $ 24,192
Accumulated impairment at December 31, 2021 (18,217) (254) (18,471)
Balance at December 31, 2021 1,314 4,407 5,721
Disposition (161) — (161)
Acquisitions 41 417 458
Currency exchange, impairment and other — (96) (96)
Total 1,194 4,728 5,922
Classified as held for sale (1)
— (230) (230)
Balance at December 31, 2022 1,194 4,498 5,691
Currency exchange and other 16 (30) (14)
Balance at March 31, 2023 $ 1,210 $ 4,468 $ 5,677

~~(1)~~The reduction in Industrial & Energy Technology ("IET") goodwill relates to transferring our IET Nexus Controls business to held for sale. See "Note 17. Business Held for Sale" for further information.

We perform our annual goodwill impairment test for each of our reporting units as of July 1 of each fiscal year, in conjunction with our annual strategic planning process. We also test goodwill for impairment whenever events or circumstances occur which, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying value. Potential impairment indicators include, but are not limited to, (i) the results of our most recent annual or interim impairment testing, in particular the magnitude of the excess of fair value over carrying value observed, (ii) downward revisions to internal forecasts, and the magnitude thereof, if any, and (iii) declines in Baker Hughes' market capitalization below its book value, and the magnitude and duration of those declines, if any.

During the first quarter of 2023, we completed a review to assess whether indicators of impairment existed. As a result of this assessment, we concluded that no indicators existed that would lead to a determination that it is more likely than not that the fair value of each reporting unit is less than its carrying value. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future periods.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 8~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

OTHER INTANGIBLE ASSETS

Intangible assets are comprised of the following:


		March 31, 2023						December 31, 2022							June 30, 2023						December 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net			Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	Customer relationships	$	1,898	$	(746)	$	1,152	$	1,917	$	(729)	$	1,189	Customer relationships	$	1,927	$	(775)	$	1,152	$	1,917	$	(729)	$	1,189
Technology	Technology	1,204		(816)		388		1,212		(803)		409		Technology	1,231		(849)		382		1,212		(803)		409
Trade names and trademarks	Trade names and trademarks	287		(178)		109		287		(175)		112		Trade names and trademarks	290		(181)		109		287		(175)		112
Capitalized software	Capitalized software	1,325		(1,053)		272		1,308		(1,040)		268		Capitalized software	1,365		(1,086)		279		1,308		(1,040)		268

Finite-lived intangible assets	Finite-lived intangible assets	4,714		(2,793)		1,921		4,725		(2,747)		1,978		Finite-lived intangible assets	4,813		(2,891)		1,922		4,725		(2,747)		1,978
Indefinite-lived intangible assets	Indefinite-lived intangible assets	2,202		—		2,202		2,202		—		2,202		Indefinite-lived intangible assets	2,202		—		2,202		2,202		—		2,202
Total intangible assets	Total intangible assets	$	6,916	$	(2,793)	$	4,123	$	6,927	$	(2,747)	$	4,180	Total intangible assets	$	7,015	$	(2,891)	$	4,124	$	6,927	$	(2,747)	$	4,180

Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 1 to 35 years. Amortization expense for the three months ended ~~March 31,~~June 30, 2023 and 2022 was $63 million and $55 million, respectively, and $126 million and $110 million for the six months ended June 30, 2023 and 2022, respectively.

Estimated amortization expense for the remainder of 2023 and each of the subsequent five fiscal years is expected to be as follows:


Year	Year	Estimated Amortization Expense		Year	Estimated Amortization Expense
Remainder of 2023	Remainder of 2023	$	184	Remainder of 2023	$	124
2024	2024	227		2024	232
2025	2025	186		2025	192
2026	2026	144		2026	146
2027	2027	120		2027	123
2028	2028	97		2028	107

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 9

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 5. CONTRACT AND OTHER DEFERRED ASSETS

Contract assets reflect revenue earned in excess of billings on our long-term contracts to construct technically complex equipment, provide long-term product service and maintenance or extended warranty arrangements and other deferred contract related costs. Our long-term product service agreements are provided by our IET segment. Our long-term equipment contracts are provided by both our IET and OFSE segments. Contract assets are comprised of the following:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
Long-term product service agreements	Long-term product service agreements	$	396	$	392	Long-term product service agreements	$	410	$	392
Long-term equipment contracts and certain other service agreements	Long-term equipment contracts and certain other service agreements	1,034		955		Long-term equipment contracts and certain other service agreements	1,145		955
Contract assets (total revenue in excess of billings)	Contract assets (total revenue in excess of billings)	1,430		1,347		Contract assets (total revenue in excess of billings)	1,555		1,347
Deferred inventory costs	Deferred inventory costs	142		125		Deferred inventory costs	180		125
Other costs to fulfill or obtain a contract (1)	Other costs to fulfill or obtain a contract (1)	31		31		Other costs to fulfill or obtain a contract (1)	41		31

Contract and other deferred assets	Contract and other deferred assets	$	1,603	$	1,503	Contract and other deferred assets	$	1,776	$	1,503

(1) Other costs to fulfill or obtain a contract consist primarily of non-recurring engineering costs incurred and expected to be recovered.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 9~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Revenue recognized during the three months ended ~~March 31,~~June 30, 2023 and 2022 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $1$13 million and ~~$(4)~~$17 million, respectively, and $14 million and $13 million during the six months ended June 30, 2023 and 2022, respectively. This includes revenue recognized from revisions to cost or billing estimates that may affect a ~~contract’s~~contract's total estimated profitability resulting in an adjustment of earnings.

NOTE 6. PROGRESS COLLECTIONS AND DEFERRED INCOME

Contract liabilities include progress collections, which reflects billings in excess of revenue, and deferred income on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements. Contract liabilities are comprised of the following:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
Progress collections	Progress collections	$	4,282	$	3,713	Progress collections	$	4,950	$	3,713
Deferred income	Deferred income	152		109		Deferred income	151		109
Progress collections and deferred income (contract liabilities)	Progress collections and deferred income (contract liabilities)	$	4,434	$	3,822	Progress collections and deferred income (contract liabilities)	$	5,101	$	3,822

Revenue recognized during the three months ended ~~March 31,~~June 30, 2023 and 2022 that was included in the contract liabilities at the beginning of the period was ~~$962~~$507 million and ~~$739~~$513 million, respectively, and $1,468 million and $1,253 million during the six months ended June 30, 2023 and 2022, respectively.

NOTE 7. LEASES

Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment.


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Operating Lease Expense	Operating Lease Expense	2023		2022			Operating Lease Expense	2023		2022		2023		2022
Long-term fixed lease	Long-term fixed lease	$	69	$	63		Long-term fixed lease	$	68	$	63	$	137	$	126
Long-term variable lease	Long-term variable lease	15		9			Long-term variable lease	19		13		34		22
Short-term lease	Short-term lease	128		109			Short-term lease	124		114		251		224
Total operating lease expense	Total operating lease expense	$	212	$	181		Total operating lease expense	$	210	$	190	$	422	$	372

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 10

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

Cash flows used in operating activities for operating leases approximates our expense for the three and six months ended ~~March 31,~~June 30, 2023 and 2022.

The weighted-average remaining lease term as of ~~March 31,~~June 30, 2023 and December 31, 2022 was approximately seven years for our operating leases. The weighted-average discount rate used to determine the operating lease liability as of ~~March 31,~~June 30, 2023 and December 31, 2022 was ~~3.2%~~3.5% and 3.1%, respectively.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 10~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

NOTE 8. DEBT

The carrying value of our short-term and long-term debt are comprised of the following:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
Short-term and current portion of long-term debt	Short-term and current portion of long-term debt					Short-term and current portion of long-term debt

1.231% Senior Notes due December 2023	1.231% Senior Notes due December 2023	$	649	$	649	1.231% Senior Notes due December 2023	$	649	$	649
8.55% Debentures due June 2024						8.55% Debentures due June 2024	111		—
Other debt	Other debt	35		29		Other debt	85		29
Total short-term and current portion of long-term debt	Total short-term and current portion of long-term debt	684		677		Total short-term and current portion of long-term debt	845		677


Long-term debt	Long-term debt					Long-term debt

8.55% Debentures due June 2024	8.55% Debentures due June 2024	113		114		8.55% Debentures due June 2024	—		114
2.061% Senior Notes due December 2026	2.061% Senior Notes due December 2026	597		597		2.061% Senior Notes due December 2026	598		597
3.337% Senior Notes due December 2027	3.337% Senior Notes due December 2027	1,287		1,277		3.337% Senior Notes due December 2027	1,280		1,277
6.875% Notes due January 2029	6.875% Notes due January 2029	272		273		6.875% Notes due January 2029	270		273
3.138% Senior Notes due November 2029	3.138% Senior Notes due November 2029	523		523		3.138% Senior Notes due November 2029	523		523
4.486% Senior Notes due May 2030	4.486% Senior Notes due May 2030	497		497		4.486% Senior Notes due May 2030	497		497
5.125% Senior Notes due September 2040	5.125% Senior Notes due September 2040	1,285		1,286		5.125% Senior Notes due September 2040	1,284		1,286
4.080% Senior Notes due December 2047	4.080% Senior Notes due December 2047	1,338		1,338		4.080% Senior Notes due December 2047	1,338		1,338
Other long-term debt	Other long-term debt	63		75		Other long-term debt	58		75
Total long-term debt	Total long-term debt	5,975		5,980		Total long-term debt	5,848		5,980
Total debt	Total debt	$	6,659	$	6,658	Total debt	$	6,693	$	6,658

The estimated fair value of total debt at ~~March 31,~~June 30, 2023 and December 31, 2022 was ~~$6,040~~$5,964 million and $5,863 million, respectively. For a majority of our debt the fair value was determined using quoted period-end market prices. Where market prices are not available, we estimate fair values based on valuation methodologies using current market interest rate data adjusted for our non-performance risk.

~~BHH LLC has~~We have a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial banks maturing in December 2024. In addition, we have a commercial paper program with authorization up to $3 billion under which we may issue from time to time commercial paper with maturities of no more than 397 days. The Credit Agreement contains certain customary representations and warranties, certain customary affirmative covenants and certain customary negative covenants. Upon the occurrence of certain events of default, ~~BHH LLC's~~our obligations under the Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the Credit Agreement and other customary defaults. No such events of default have occurred. At ~~March 31,~~June 30, 2023 and December 31, 2022, there were no borrowings under either the Credit Agreement or the commercial paper program.

Baker Hughes Co-Obligor, Inc. is a co-obligor, jointly and severally with BHH LLC on our long-term debt securities. This co-obligor is a 100%-owned finance subsidiary of BHH LLC that was incorporated for the sole purpose of serving as a corporate co-obligor of ~~long-term~~ debt securities and has no assets or operations other than those related to its sole purpose. As of ~~March 31,~~June 30, 2023, Baker Hughes Co-Obligor, Inc. is a co-obligor of ~~our long-term~~certain debt securities totaling ~~$6,560~~$6,550 million.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 11

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

Certain Senior Notes contain covenants that restrict ~~BHH LLC's~~our ability to take certain actions, including, but not limited to, the creation of certain liens securing debt, the entry into certain sale-leaseback transactions, and engaging in certain merger, consolidation and asset sale transactions in excess of specified limits. At ~~March 31,~~June 30, 2023, we were in compliance with all debt covenants.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 11~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

NOTE 9. INCOME TAXES

For the three and six months ended ~~March 31,~~June 30, 2023, the provision for income taxes was ~~$141 million.~~$171 million and $312 million, respectively. 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., which is partially offset by tax benefits related to uncertain tax positions. Further, for the six months ended June 30, 2023, the tax rate is also partially reduced by income subject to U.S. tax at an effective rate less than 21% due to valuation ~~allowances, which is partially offset by income in jurisdictions with tax rates higher than in the U.S.~~allowances. In addition, since we are a partnership for U.S. federal tax purposes, any tax impacts associated with U.S. income or losses are recognized by our Members and not reflected in our tax expense.

For the three and six months ended ~~March 31,~~June 30, 2022, the provision for income taxes was ~~$95 million.~~$181 million and $276 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances, restructuring charges related to our Russia operations for which a majority has no tax benefit, and income in jurisdictions with tax rates higher than in the U.S.~~, partially offset by tax benefits related to uncertain tax positions.~~

NOTE 10. MEMBERS' EQUITY

COMMON UNITS

The BHH LLC Agreement provides that ~~initially~~ there is one class of common units ("Units")~~, which~~ and the holders of the Units are ~~currently~~referred to as Members. As of June 30, 2023 and December 31, 2022, all outstanding Units are held by ~~the Members.~~Baker Hughes Company ("Baker Hughes") or one of its direct subsidiaries. If Baker Hughes issues a share of Class A common stock, including in connection with an equity incentive or similar plan, we will also issue a corresponding Unit to Baker Hughes or one of its direct subsidiaries. For the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, we issued ~~5,920~~6,696 thousand and ~~7,730~~8,470 thousand Units, respectively, to Baker Hughes or one of its direct subsidiaries in connection with the issuance of its Class A common stock. The Members are entitled through their Units to receive distributions on an equal amount of any dividend paid by Baker Hughes to its Class A shareholders.

We have a Unit repurchase program which we expect to fund from cash generated from operations, and we expect to make Unit repurchases from time to time subject to the Company's capital plan, market conditions, and other factors, including regulatory restrictions. The repurchase program may be suspended or discontinued at any time and does not have a specified expiration date. ~~There were no Units repurchased during the three months ended March 31, 2023.~~ During the three and six months ended ~~March 31, 2022,~~June 30, 2023, we repurchased and canceled ~~8.1~~3.6 million Units for ~~a total of $236~~$99 million, representing an average price per Unit of ~~$28.96.~~$27.66. During the three and six months ended June 30, 2022, we repurchased and canceled 6.7 million and 14.8 million Units for $226 million and $462 million, representing an average price per Unit of $33.77 and $31.13, respectively. As of ~~March 31,~~June 30, 2023, we had authorization remaining to repurchase up to approximately ~~$2.8~~$2.7 billion of our Units.

~~The following table presents the changes in the number of Units outstanding (in thousands):~~

Units Held
by Baker Hughes Units Held
by GE
2023 2022 2023 2022
Balance at January 1 1,005,960 909,142 — 116,548
Issue of Units to Baker Hughes under equity incentive plan 5,920 7,730 — —
Exchange of Units (1)
— 75,957 — (75,957)
Repurchase and cancellation of Units — (8,142) — —
Balance at March 31 1,011,881 984,688 — 40,591

~~(1)When shares of Class B common stock, together with associated Units, are exchanged for shares of Class A common stock, such shares of Class B common stock are canceled.~~

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 12

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents the changes in the number of Units outstanding (in thousands):


	Units Held by Baker Hughes		Units Held by General Electric Company
	2023	2022	2023	2022
Balance at January 1	1,005,960	909,142	—	116,548
Issue of Units to Baker Hughes under equity incentive plan	6,696	8,470	—	—


Exchange of Units (1)	—	109,548	—	(109,548)
Repurchase and cancellation of Units	(3,596)	(14,825)	—	—
Balance at June 30	1,009,061	1,012,335	—	7,000

(1)When shares of Baker Hughes' Class B common stock, together with associated Units, are exchanged for shares of Baker Hughes' Class A common stock, such shares of Class B common stock are canceled.

ACCUMULATED OTHER COMPREHENSIVE LOSS (AOCL)

The following tables present the changes in accumulated other comprehensive loss, net of tax:


		Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss			Investment Securities		Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss
Balance at December 31, 2022	Balance at December 31, 2022	$	(2,665)	$	(10)	$	(296)	$	(2,971)	Balance at December 31, 2022	$	—	$	(2,665)	$	(10)	$	(296)	$	(2,971)
Other comprehensive income before reclassifications		(61)		(1)		3		(59)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	1		168		11		(13)		167
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	—		1		4		5		Amounts reclassified from accumulated other comprehensive loss	—		—		2		7		9

Deferred taxes										Deferred taxes	—		—		(2)		2		—
Other comprehensive income (loss)	Other comprehensive income (loss)	(61)		(1)		7		(55)		Other comprehensive income (loss)	1		168		11		(4)		176

Balance at March 31, 2023		$	(2,726)	$	(11)	$	(289)	$	(3,026)
Balance at June 30, 2023										Balance at June 30, 2023	$	1	$	(2,498)	$	1	$	(299)	$	(2,795)


		Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss			Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss
Balance at December 31, 2021	Balance at December 31, 2021	$	(2,398)	$	(12)	$	(281)	$	(2,691)	Balance at December 31, 2021	$	(2,398)	$	(12)	$	(281)	$	(2,691)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(17)		—		5		(12)		Other comprehensive income (loss) before reclassifications	(188)		(1)		27		(162)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	34		1		6		41		Amounts reclassified from accumulated other comprehensive loss	35		2		12		49
Deferred taxes	Deferred taxes	—		—		(2)		(2)		Deferred taxes	—		—		(7)		(7)
Other comprehensive income		17		1		8		26
Less: Other comprehensive loss attributable to noncontrolling interests		(1)		—		—		(1)
Other comprehensive income (loss)										Other comprehensive income (loss)	(153)		1		32		(120)
Less: Other comprehensive income (loss) attributable to noncontrolling interests										Less: Other comprehensive income (loss) attributable to noncontrolling interests	(2)		—		—		(2)

Balance at March 31, 2022		$	(2,380)	$	(11)	$	(273)	$	(2,664)
Balance at June 30, 2022										Balance at June 30, 2022	$	(2,549)	$	(11)	$	(249)	$	(2,809)

The amounts reclassified from accumulated other comprehensive loss during the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022 represent (i) gains (losses) reclassified on cash flow hedges when the hedged transaction occurs, (ii) the amortization of net actuarial gain (loss), prior service credit, settlements, and curtailments which are included in the computation of net periodic pension cost, and (iii) the release of foreign currency translation adjustments (see "Note 16. Restructuring, Impairment, and Other" for additional details).

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 13

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 11. FINANCIAL INSTRUMENTS

RECURRING FAIR VALUE MEASUREMENTS

Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.


		March 31, 2023								December 31, 2022									June 30, 2023								December 31, 2022
		Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance			Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
Assets	Assets																	Assets
Derivatives	Derivatives	$	—	$	27	$	—	$	27	$	—	$	18	$	—	$	18	Derivatives	$	—	$	27	$	—	$	27	$	—	$	18	$	—	$	18
Investment securities	Investment securities	1,105		—		—		1,105		748		—		—		748		Investment securities	1,078		—		—		1,078		748		—		—		748
Total assets	Total assets	1,105		27		—		1,132		748		18		—		766		Total assets	1,078		27		—		1,105		748		18		—		766

Liabilities	Liabilities																	Liabilities
Derivatives	Derivatives	—		(88)		—		(88)		—		(86)		—		(86)		Derivatives	—		(73)		—		(73)		—		(86)		—		(86)
Total liabilities	Total liabilities	$	—	$	(88)	$	—	$	(88)	$	—	$	(86)	$	—	$	(86)	Total liabilities	$	—	$	(73)	$	—	$	(73)	$	—	$	(86)	$	—	$	(86)


		March 31, 2023								December 31, 2022									June 30, 2023								December 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investment securities (1)	Investment securities (1)																	Investment securities (1)
Non-U.S. debt securities (2)	Non-U.S. debt securities (2)	$	11	$	—	$	—	$	11	$	—	$	—	$	—	$	—	Non-U.S. debt securities (2)	$	33	$	1	$	—	$	34	$	—	$	—	$	—	$	—
Equity securities	Equity securities	545		549		—		1,094		557		191		—		748		Equity securities	534		510		—		1,044		557		191		—		748
Total	Total	$	556	$	549	$	—	$	1,105	$	557	$	191	$	—	$	748	Total	$	567	$	511	$	—	$	1,078	$	557	$	191	$	—	$	748

(1)Gains (losses) recorded to earnings related to these securities were ~~$392~~$(1) million and ~~$12~~$(130) million for the three months ended ~~March 31,~~June 30, 2023 and 2022, ~~respectively.~~respectively, and $391 million and $(118) million for the six months ended June 30, 2023 and 2022.

(2)As of ~~March 31,~~June 30, 2023, our non-U.S. debt securities are classified as available for sale securities and mature within one year.

As of ~~March 31,~~June 30, 2023 and December 31, 2022, the balance of our equity securities with readily determinable fair values were $1,044 million and $748 million, respectively, and are comprised primarily of our investment in ~~C3.ai, Inc. ("C3 AI") of $232 million and $97 million, respectively, and~~ ADNOC Drilling and C3.ai, Inc., and are recorded in "All other current assets" in the condensed consolidated statements of ~~$860 million and $649 million, respectively.~~financial position. We measured our investments to fair value based on quoted prices in active markets.

~~As of March 31, 2023,~~Gains (losses) recorded to earnings for our ~~investment in C3 AI consists of 6,920,476 shares of Class A common stock ("C3 AI Shares"). During~~equity securities with readily determinable fair values were $29 million and $(123) million for the three months ended ~~March 31, 2023, we sold approximately 1.7 million of C3 AI Shares and received proceeds of $46 million.For the three months ended March 31,~~June 30, 2023 and 2022, ~~we recorded a gain of $181~~respectively, and $421 million and ~~a loss of $74~~$(111) million ~~respectively, from~~for the ~~net change in~~six months ended June 30, 2023 and 2022, respectively. Gains (losses) related to our equity securities with readily determinable fair ~~value of our investment in C3 AI, which is~~values are reported in ~~“Other~~"Other non-operating income (loss), ~~net” in our condensed consolidated statements of income (loss).~~

As of March 31, 2023, our investment in ADNOC Drilling consists of 800,000,000 shares. For the three months ended March 31, 2023 and 2022, we recorded a gain of $211 million and $85 million, respectively, from the net change in fair value of our investment in ADNOC Drilling, which is reported in “Other non-operating income (loss), net”net" in our condensed consolidated statements of income (loss).

OTHER EQUITY INVESTMENTS

As of ~~March 31,~~June 30, 2023 and December 31, 2022, ~~$1,105~~the carrying amount of equity securities without readily determinable fair values was $143 million and ~~$748~~$60 million, ~~respectively,~~respectively. During the second quarter of ~~total investment~~2023, certain of these equity securities ~~are recorded~~were remeasured to fair value as of the date that an observable transaction occurred. The remeasurement resulted in ~~"All other current assets."~~the Company recording a gain of $118 million. Gains (losses) related to our equity

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 14

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

securities without readily determinable fair values are reported in "Other non-operating income (loss), net" in our condensed consolidated statements of income (loss).

FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

Our financial instruments include cash and cash equivalents, current receivables, certain investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments as of ~~March 31,~~June 30, 2023 and December 31, 2022 approximates their carrying value as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 8. Debt."

DERIVATIVES AND HEDGING

We use derivatives to manage our risks and do not use derivatives for speculation. The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.


		March 31, 2023				December 31, 2022					June 30, 2023				December 31, 2022
		Assets		Liabilities		Assets		Liabilities			Assets		Liabilities		Assets		Liabilities
Derivatives accounted for as hedges	Derivatives accounted for as hedges									Derivatives accounted for as hedges
Currency exchange contracts	Currency exchange contracts	$	—	$	—	$	1	$	—	Currency exchange contracts	$	5	$	—	$	1	$	—
Interest rate swap contracts	Interest rate swap contracts	—		(61)		—		(69)		Interest rate swap contracts	6		(66)		—		(69)

Derivatives not accounted for as hedges	Derivatives not accounted for as hedges									Derivatives not accounted for as hedges
Currency exchange contracts and other	Currency exchange contracts and other	27		(27)		17		(17)		Currency exchange contracts and other	16		(7)		17		(17)

Total derivatives	Total derivatives	$	27	$	(88)	$	18	$	(86)	Total derivatives	$	27	$	(73)	$	18	$	(86)

Derivatives are classified in the condensed consolidated statements of financial position depending on their respective maturity date. As of ~~March 31,~~June 30, 2023 and December 31, 2022, ~~$26~~$25 million and $17 million of derivative assets are recorded in "All other current assets" and $1$2 million and $1 million are recorded in "All other assets" in the condensed consolidated statements of financial position, respectively. As of ~~March 31,~~June 30, 2023 and December 31, 2022, ~~$29~~$7 million and $17 million of derivative liabilities are recorded in "All other current liabilities" and ~~$59~~$66 million and $69 million are recorded in "All other liabilities" ofin the condensed consolidated statements of financial position, respectively.

FORMS OF HEDGING

Cash Flow Hedges

We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. In addition, we are exposed to interest rate risk fluctuations in connection with long-term debt that we issue from time to time to fund our operations. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company executed interest rate swap contracts designated as cash flow hedges with a notional amount of $375 million in order to hedge the Company's expected exposure in connection with refinancing activities we may undertake in 2023. Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to as "Accumulated Other Comprehensive Income" or "AOCI") and are recorded in earnings in the period in which the hedged transaction occurs. See "Note 10. Members' Equity" for further information on activity in AOCI for cash flow hedges. As of ~~March 31,~~June 30, 2023 and December 31, 2022, the maximum term of derivative instruments that hedge forecasted transactions was approximately two years and one ~~year.~~year, respectively.

Fair Value Hedges

All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 15

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

certain debt. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 15~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

As of ~~March 31,~~June 30, 2023 and December 31, 2022, we had interest rate swaps with a notional amount of $500 million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk. As of July 1, 2023, the interest rate is based on a Secured Overnight Financing Rate ("SOFR") index. We concluded that the interest rate swap met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.

~~Economic Hedges~~

These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. Economic hedges are marked to fair value through earnings each period.

~~The following table summarizes the gains (losses) from derivatives not designated as hedges in the condensed consolidated statements of income (loss):~~

Derivatives not designated as hedging instruments Condensed consolidated statements of income (loss) caption Three Months Ended March 31,
2023 2022
Currency exchange contracts (1)
Cost of goods sold $ 3 $ (2)
Currency exchange contracts Cost of services sold 2 3
Commodity derivatives Cost of goods sold 1 9
Total (2)
$ 6 $ 10

~~(1)~~Excludes losses of nil and gains of $1 million on embedded derivatives for the three months ended March 31, 2023 and 2022, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges.

~~(2)The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the economically hedged items in the current and future periods.~~

NOTIONAL AMOUNT OF DERIVATIVES

The notional amount of a derivative is the number of units of the underlying. A substantial majority of the outstanding notional amount of ~~$4.3~~$4.1 billion and $3.8 billion at ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to execute these contracts with the same counterparty to reduce our exposure. The notional amount of these derivative instruments do not generally represent cash amounts exchanged by us and the counterparties, but rather the nominal amount upon which changes in the value of the derivatives are measured.

COUNTERPARTY CREDIT RISK

Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 16

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 12. REVENUE RELATED TO CONTRACTS WITH CUSTOMERS

DISAGGREGATED REVENUE

We disaggregate our OFSE and IET segment revenue from contracts with customers by product ~~lines.~~line. See "Note 13. Segment Information" for further details.


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Total Revenue	Total Revenue	2023		2022			Total Revenue	2023		2022		2023		2022
Well Construction	Well Construction	$	1,061	$	883		Well Construction	$	1,076	$	936	$	2,137	$	1,819
Completions, Intervention & Measurements	Completions, Intervention & Measurements	909		781			Completions, Intervention & Measurements	1,090		886		1,999		1,667
Production Solutions	Production Solutions	938		825			Production Solutions	959		866		1,897		1,691
Subsea & Surface Pressure Systems	Subsea & Surface Pressure Systems	670		528			Subsea & Surface Pressure Systems	752		541		1,422		1,070
Oilfield Services & Equipment	Oilfield Services & Equipment	3,577		3,017			Oilfield Services & Equipment	3,877		3,230		7,454		6,247
Gas Technology - Equipment	Gas Technology - Equipment	827		543			Gas Technology - Equipment	999		556		1,826		1,099
Gas Technology - Services	Gas Technology - Services	591		581			Gas Technology - Services	658		542		1,249		1,123
Total Gas Technology	Total Gas Technology	1,418		1,124			Total Gas Technology	1,658		1,098		3,075		2,222
Condition Monitoring	Condition Monitoring	140		126			Condition Monitoring	154		133		294		259
Inspection	Inspection	254		212			Inspection	318		257		572		469
Pumps, Valves & Gears	Pumps, Valves & Gears	201		221			Pumps, Valves & Gears	217		194		418		415
PSI & Controls	PSI & Controls	125		136			PSI & Controls	92		135		216		270
Total Industrial Technology	Total Industrial Technology	721		694			Total Industrial Technology	780		718		1,501		1,413
Industrial & Energy Technology	Industrial & Energy Technology	2,138		1,818			Industrial & Energy Technology	2,438		1,816		4,576		3,635
Total	Total	$	5,716	$	4,835		Total	$	6,315	$	5,047	$	12,030	$	9,882

In addition, management views OFSE segment revenue from contracts with customers by geographic region:


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Oilfield Services & Equipment Geographic Revenue	Oilfield Services & Equipment Geographic Revenue	2023		2022			Oilfield Services & Equipment Geographic Revenue	2023		2022		2023		2022
North America	North America	$	992	$	823		North America	$	1,042	$	925	$	2,033	$	1,748
Latin America	Latin America	661		440			Latin America	698		509		1,358		950
Europe/CIS/Sub-Saharan Africa	Europe/CIS/Sub-Saharan Africa	581		660			Europe/CIS/Sub-Saharan Africa	672		660		1,253		1,320
Middle East/Asia	Middle East/Asia	1,345		1,094			Middle East/Asia	1,465		1,136		2,810		2,230
Oilfield Services & Equipment	Oilfield Services & Equipment	$	3,577	$	3,017		Oilfield Services & Equipment	$	3,877	$	3,230	$	7,454	$	6,247

REMAINING PERFORMANCE OBLIGATIONS

As of ~~March 31,~~June 30, 2023, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was ~~$29.6~~$31 billion. As of ~~March 31,~~June 30, 2023, we expect to recognize revenue of approximately 60%, ~~72%~~74% and 90% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 17

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 13. SEGMENT INFORMATION

The Company's segments are determined as those operations whose results are reviewed regularly by the chief operating decision maker ("CODM"), who is our Chief Executive Officer, in deciding how to allocate resources and assess performance. We report our operating results through two operating segments, Oilfield Services & Equipment and Industrial & Energy Technology. Each segment is organized and managed based upon the nature of our markets and customers and consists of similar products and services. These products and services operate across upstream oil and gas and broader energy and industrial markets.

OILFIELD SERVICES & EQUIPMENT ("OFSE")

Oilfield Services & Equipment provides products and services for onshore and offshore oilfield operations across the lifecycle of a well, ranging from exploration, appraisal, and development, to production, rejuvenation, and decommissioning. OFSE is organized into four product lines: Well Construction, which encompasses drilling services, drill bits, and drilling & completions fluids; Completions, Intervention, and Measurements, which encompasses well completions, pressure pumping, and wireline services; Production Solutions, which spans artificial lift systems and oilfield & industrial chemicals; and Subsea & Surface Pressure Systems, which encompasses subsea projects services and drilling systems, surface pressure control, and flexible pipe systems. Beyond its traditional oilfield concentration, OFSE is expanding its capabilities and technology portfolio to meet the challenges of a net-zero future. These efforts include expanding into new energy areas such as geothermal and ~~CCUS,~~carbon capture, utilization and storage, strengthening its digital architecture and addressing key energy market themes.

INDUSTRIAL & ENERGY TECHNOLOGY ("IET")

Industrial & Energy Technology provides technology solutions and services for mechanical-drive, compression and power-generation applications across the energy industry, including oil and gas, liquefied natural gas ("LNG") operations, downstream refining and petrochemical markets, as well as lower carbon solutions to broader energy and industrial sectors. IET also provides equipment, software, and services that serve a wide range of industries including petrochemical and refining, nuclear, aviation, automotive, mining, cement, metals, pulp and paper, and food and beverage. IET is organized into six product lines - Gas Technology Equipment and Gas Technology Services, collectively referred to as Gas Technology, and Condition Monitoring, Inspection, Pumps Valves & Gears, and PSI & Controls, collectively referred to as Industrial Technology.

Revenue and operating income for each segment are determined based on the internal performance measures used by the CODM to assess the performance of each segment in a financial period. The performance of our operating segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes before the following: net interest expense, net other non-operating income (loss), corporate expenses, restructuring, impairment and other charges, inventory impairments, and certain gains and losses not allocated to the operating segments. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods. Intercompany revenue and expense amounts have been eliminated within each segment to report on the basis that management uses internally for evaluating segment performance.

Summarized financial information for the Company's segments is shown in the following tables.


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Revenue	Revenue	2023		2022			Revenue	2023		2022		2023		2022
Oilfield Services & Equipment	Oilfield Services & Equipment	$	3,577	$	3,017		Oilfield Services & Equipment	$	3,877	$	3,230	$	7,454	$	6,247
Industrial & Energy Technology	Industrial & Energy Technology	2,138		1,818			Industrial & Energy Technology	2,438		1,816		4,576		3,635
Total	Total	$	5,716	$	4,835		Total	$	6,315	$	5,047	$	12,030	$	9,882

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 18

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Income before income taxes	Income before income taxes	2023		2022			Income before income taxes	2023		2022		2023		2022
Oilfield Services & Equipment	Oilfield Services & Equipment	$	371	$	213		Oilfield Services & Equipment	$	417	$	249	$	789	$	461
Industrial & Energy Technology	Industrial & Energy Technology	241		241			Industrial & Energy Technology	311		236		552		476
Total segment	Total segment	612		453			Total segment	728		485		1,341		938
Corporate	Corporate	(100)		(105)			Corporate	(97)		(108)		(197)		(213)

Inventory impairment	Inventory impairment	(18)		—			Inventory impairment	(15)		(31)		(33)		(31)
Restructuring, impairment and other	Restructuring, impairment and other	(56)		(70)			Restructuring, impairment and other	(102)		(371)		(158)		(441)
Other non-operating income (loss), net	Other non-operating income (loss), net	386		(28)			Other non-operating income (loss), net	158		(570)		544		(597)
Interest expense, net	Interest expense, net	(64)		(64)			Interest expense, net	(58)		(60)		(122)		(124)
Income before income taxes	Income before income taxes	$	760	$	187		Income before income taxes	$	614	$	(655)	$	1,374	$	(468)

The following table presents depreciation and amortization by segment:


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Depreciation and amortization	Depreciation and amortization	2023		2022			Depreciation and amortization	2023		2022		2023		2022
Oilfield Services & Equipment	Oilfield Services & Equipment	$	208	$	222		Oilfield Services & Equipment	$	219	$	221	$	426	$	443
Industrial & Energy Technology	Industrial & Energy Technology	56		51			Industrial & Energy Technology	52		49		109		100
Total segment	Total segment	264		272			Total segment	271		270		535		542
Corporate	Corporate	5		4			Corporate	5		5		10		9
Total	Total	$	269	$	277		Total	$	276	$	275	$	545	$	551

NOTE 14. RELATED PARTY TRANSACTIONS

We have an aeroderivative joint venture ("Aero JV") we formed with GEGeneral Electric Company ("GE") in 2019. The Aero JV is jointly controlled by GE and us, each with ownership interest of 50%, and therefore, we do not consolidate the JV. We had purchases ~~with~~from the Aero JV of ~~$114~~$131 million and ~~$108~~$145 million during the three months ended ~~March 31,~~June 30, 2023 and 2022, respectively, and $245 million and $253 million during the six months ended June 30, 2023 and 2022, respectively. We have ~~$55~~$61 million and $110 million of accounts payable at ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, for goods and services provided by the Aero JV in the ordinary course of business. Sales of products and services and related receivables with the Aero JV were immaterial for the three and six months ended ~~March 31,~~June 30, 2023 and 2022.

~~The Company also has $85 million and $16 million of current receivables at March 31, 2023 and December 31, 2022, respectively, from Baker Hughes.~~

NOTE 15. COMMITMENTS AND CONTINGENCIES

LITIGATION

We are subject to legal proceedings arising in the ordinary course of our business. Because legal proceedings are inherently uncertain, we are unable to predict the ultimate outcome of such matters. We record a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. Based on the opinion of management, we do not expect the ultimate outcome of currently pending legal proceedings to have a material adverse effect on our results of operations, financial position or cash flows. However, there can be no assurance as to the ultimate outcome of these matters.

On July 31, 2018, International Engineering & Construction S.A. ("IEC") initiated arbitration proceedings in New York administered by the International Center for Dispute Resolution ("ICDR") against the Company and its subsidiaries arising out of a series of sales and service contracts entered between IEC and the ~~Company’s~~Company's subsidiaries for the sale and installation of LNG plants and related power generation equipment in Nigeria ("Contracts"). Prior to the filing of the IEC Arbitration, the Company’s subsidiaries made demands for payment due under the Contracts. On August 15, 2018, the Company's subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due under the Contracts. On October 10, 2018,

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 19

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

under the Contracts. On August 15, 2018, the Company’s subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due under the Contracts. On October 10, 2018, IEC filed a Petition to Compel Arbitration in the United States District Court for the Southern District of New York against the Company seeking to compel non-signatory Baker Hughes entities to participate in the arbitration filed by IEC. The complaint is captioned International Engineering & Construction S.A. et al. v. Baker Hughes, a GE company, LLC, et al. No. 18-cv-09241 ("S.D.N.Y 2018"); this action was dismissed by the Court on August 13, 2019. In the arbitration, IEC alleges breach of contract and other claims against the Company and its subsidiaries and seeks recovery of alleged compensatory damages, in addition to reasonable attorneys' fees, expenses and arbitration costs. On March 15, 2019, IEC amended its request for arbitration to alleged damages of $591 million of lost profits plus unspecified additional costs based on alleged non-performance of the contracts in dispute. The arbitration hearing was held from December 9, 2019 to December 20, 2019. On March 3, 2020, IEC amended their damages claim to $700 million of alleged loss cash flow or, in the alternative, $244.9 million of lost profits and various costs based on alleged non-performance of the contracts in dispute, and in addition $4.8 million of liquidated damages, $58.6 million in take-or-pay costs of feed gas, and unspecified additional costs of rectification and take-or-pay future obligations, plus unspecified interest and attorneys' fees. On May 3, 2020, the arbitration panel dismissed IEC's request for take-or-pay damages. On May 29, 2020, IEC quantified their claim for legal fees at $14.2 million and reduced their alternative claim from $244.9 million to approximately $235 million. The Company and its subsidiaries have contested ~~IEC’s~~IEC's claims and are pursuing claims for compensation under the contracts. On October 31, 2020, the ICDR notified the arbitration ~~panel’s~~panel's final award, which dismissed the majority of ~~IEC’s~~IEC's claims and awarded a portion of the ~~Company’s~~Company's claims. On January 27, 2021, IEC filed a petition to vacate the arbitral award in the Supreme Court of New York, County of New York. On March 5, 2021, the Company filed a petition to confirm the arbitral award, and on March 8, 2021, the Company removed the matter to the United States District Court for the Southern District of New York. On November 16, 2021, the court granted the Company's petition to confirm the award and denied IEC's petition to vacate. During the second quarter of 2022, IEC paid the amounts owed under the arbitration award, which had an immaterial impact on the ~~Company’s~~Company's financial statements. On February 3, 2022, IEC initiated another arbitration proceeding in New York administered by the ICDR against certain of the ~~Company’s~~Company's subsidiaries arising out of the same project which formed the basis of the first arbitration. On March 25, 2022, the Company's subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due; such claims against IEC have now been resolved, with any consideration having an immaterial impact on the ~~Company’s~~Company's financial statements. At this time, we are not able to predict the outcome of the proceeding which is pending against the ~~Company’s~~Company's subsidiaries.

On March 15, 2019 and March 18, 2019, the City of Riviera Beach Pension Fund and Richard Schippnick, respectively, filed in the Delaware Court of Chancery shareholder derivative lawsuits for and on Baker Hughes' behalf against GE, the then-current members of the Board of Directors of Baker Hughes and Baker Hughes as a nominal defendant, related to the decision to (i) terminate the contractual prohibition barring GE from selling any of Baker ~~Hughes’~~Hughes' shares before July 3, 2019; (ii) repurchase $1.5 billion in Baker Hughes' stock from GE; (iii) permit GE to sell approximately $2.5 billion in Baker Hughes' stock through a secondary offering; and (iv) enter into a series of other agreements and amendments that will govern the ongoing relationship between Baker Hughes and GE (collectively, the ~~“2018 Transactions”~~"2018 Transactions"). The complaints in both lawsuits allege, among other things, that GE, as Baker Hughes' controlling stockholder, and the members of Baker Hughes' Board of Directors breached their fiduciary duties by entering into the 2018 Transactions. The relief sought in the complaints includes a request for a declaration that the defendants breached their fiduciary duties, that GE was unjustly enriched, disgorgement of profits, an award of damages sustained by Baker Hughes, pre- and post-judgment interest, and ~~attorneys’~~attorneys' fees and costs. On March 21, 2019, the Chancery Court entered an order consolidating the Schippnick and City of Riviera Beach complaints under consolidated C.A. No. 2019-0201-AGB, styled in re Baker Hughes, a GE company derivative litigation. On May 10, 2019, Plaintiffs voluntarily dismissed their claims against the members of Baker Hughes' Conflicts Committee, and on May 15, 2019, Plaintiffs voluntarily dismissed their claims against former Baker Hughes director Martin Craighead. On June 7, 2019, the defendants and nominal defendant filed a motion to dismiss the lawsuit on the ground that the derivative plaintiffs failed to make a demand on Baker Hughes' Board of Directors to pursue the claims itself, and GE and Baker Hughes' Board of Directors filed a motion to dismiss the lawsuit on the ground that the complaint failed to state a claim on which relief can be granted. The Chancery Court denied the motions on October 8, 2019, except granted ~~GE’s~~GE's motion to dismiss the unjust enrichment claim against it. On October 31, 2019, Baker Hughes' Board of Directors designated a Special Litigation Committee and empowered it with full authority to investigate and evaluate the allegations and issues raised in the derivative litigation. The Special Litigation Committee filed a motion to stay the derivative litigation during its investigation. On

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 20~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

December 3, 2019, the Chancery Court granted the motion and stayed the derivative litigation until June 1, 2020. On May 20, 2020, the Chancery Court granted an extension of the stay to October 1, 2020, and on September 29,

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 20

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

2020, the Court granted a further extension of the stay to October 15, 2020. On October 13, 2020, the Special Litigation Committee filed its report with the Court. On April 17, 2023, the Court granted the Special Litigation ~~Committee’s~~Committee's motion to terminate the litigation. On May 16, 2023, the plaintiffs filed a notice of appeal. At this time, we are not able to predict the outcome of these proceedings.

On August 13, 2019, Tri-State Joint Fund filed in the Delaware Court of Chancery, a shareholder class action lawsuit for and on the behalf of itself and all similarly situated public stockholders of Baker Hughes Incorporated ("BHI") against the General Electric Company ("GE"), the former members of the Board of Directors of BHI, and certain former BHI Officers alleging breaches of fiduciary duty, aiding and abetting, and other claims in connection with the combination of BHI and the oil and gas business ("GE O&G") of GE ("the Transactions"). On October 28, 2019, City of Providence filed in the Delaware Court of Chancery a shareholder class action lawsuit for and on behalf of itself and all similarly situated public shareholders of BHI against GE, the former members of the Board of Directors of BHI, and certain former BHI Officers alleging substantially the same claims in connection with the Transactions. The relief sought in these complaints include a request for a declaration that Defendants breached their fiduciary duties, an award of damages, pre- and post-judgment interest, and ~~attorneys’~~attorneys' fees and costs. The lawsuits have been consolidated, and plaintiffs filed a consolidated class action complaint on December 17, 2019 against certain former BHI officers alleging breaches of fiduciary duty and against GE for aiding and abetting those breaches. The December 2019 complaint omitted the former members of the Board of Directors of BHI, except for Mr. Craighead who also served as President and CEO of BHI. Mr. Craighead and Ms. Ross, who served as Senior Vice President and Chief Financial Officer of BHI, remain named in the December 2019 complaint along with GE. The relief sought in the consolidated complaint includes a declaration that the former BHI officers breached their fiduciary duties and that GE aided and abetted those breaches, an award of damages, pre- and post-judgment interest, and ~~attorneys’~~attorneys' fees and costs. On or around February 12, 2020, the defendants filed motions to dismiss the lawsuit on the grounds that the complaint failed to state a claim on which relief could be granted. On or around October 27, 2020, the Chancery Court granted ~~GE’s~~GE's motion to dismiss, and granted in part the motion to dismiss filed by Mr. Craighead and Ms. Ross, thereby dismissing all of the claims against GE and Ms. Ross, and all but one of the claims against Mr. Craighead. ~~At this time, we are not able to predict the outcome~~On May 2, 2023, a stipulation of dismissal, disposing of the plaintiffs' remaining ~~claim.~~claims, was granted by the Court.

On or around February 15, 2023, the lead plaintiff and three additional named plaintiffs in a putative securities class action styled The Reckstin Family Trust, et al., v. C3.ai, Inc., et al., No. 4:22-cv-01413-HSG, filed an amended class action complaint (the ~~“Amended Complaint”~~"Amended Complaint") in the United States District Court for the Northern District of California. The Amended Complaint names the following as defendants: (i) C3.ai., Inc. (“("C3 ~~AI”~~AI"), (ii) certain of C3 ~~AI’s~~AI's current and/or former officers and directors, (iii) certain underwriters for the C3 AI initial public offering (the ~~“IPO”~~"IPO"), and (iv) Baker Hughes, and its President and CEO (who formerly served as a director on the board of C3 AI). The Amended Complaint alleges violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 (the ~~“Exchange Act”~~"Exchange Act") in connection with the IPO and the subsequent period between December 9, 2020 and December 2, 2021, during which BHH LLC held equity investments in C3 AI. The action seeks unspecified damages and the award of costs and expenses, including reasonable attorneys' fees. At this time, we are not able to predict the outcome of these proceedings.

We insure against risks arising from our business to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims. Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability, general liability and workers compensation.

OTHER

In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees. We also provide a guarantee to GE Capital on behalf of a customer who entered into a financing arrangement with GE Capital. Total off-balance sheet arrangements were approximately ~~$4.7~~$5 billion at ~~March 31,~~June 30, 2023. It is not practicable to estimate the fair value of these financial instruments. As of ~~March 31,~~June 30, 2023, none of the off-balance sheet

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 21

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

~~sheet~~ arrangements either has, or is likely to have, a material effect on our financial position, results of operations or cash flows.

We sometimes enter into consortium or similar arrangements for certain projects primarily in our OFSE segment. Under such arrangements, each party is responsible for performing a certain scope of work within the total scope of the contracted work, and the obligations expire when all contractual obligations are completed. The failure or inability, financially or otherwise, of any of the parties to perform their obligations could impose additional costs and obligations on us. These factors could result in unanticipated costs to complete the project, liquidated damages or contract disputes.

NOTE 16. RESTRUCTURING, IMPAIRMENT AND OTHER

We recorded restructuring, impairment and other charges of ~~$56~~$102 million and ~~$70~~$158 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, and $371 million and $441 million during the three and six months ended June 30, 2022, respectively.

RESTRUCTURING AND IMPAIRMENT CHARGES

We recorded restructuring and impairment charges of ~~$56~~$96 million and $152 million for the three and six months ended ~~March 31, 2023.~~June 30, 2023, respectively. In the third quarter of 2022, we announced a restructuring plan in conjunction with a change in our operating segments that was effective October 1, 2022 (the "2022 Plan"). As a result, we continued to incur charges in the ~~first~~second quarter of 2023 related to the 2022 Plan primarily for employee termination expenses driven by actions taken by the Company to facilitate the reorganization into two segments and corporate restructuring. In addition, under a new plan (the "2023 Plan") we incurred costs related to exit activities at specific locations in our segments to align with our current market outlook and rationalize our manufacturing supply chain footprint. These actions also included inventory impairments of ~~$18~~$15 million and $33 million for the three and six months ended June 30, 2023, respectively, recorded in "Cost of goods sold" in our condensed consolidated statements of income (loss). We expect to incur additional restructuring charges of approximately ~~$145~~$45 million in the second half of 2023 ~~in connection with~~related to these ~~restructuring~~ plans, and currently expect these plans to be substantially completed by the end ~~of 2023, with the majority of charges incurred within the first half~~ of 2023.

The following table presents restructuring and impairment charges by the impacted segment, however, these charges are not included in the reported segment results:


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Segments	Segments	2023		2022			Segments	2023		2022		2023		2022
Oilfield Services & Equipment	Oilfield Services & Equipment	$	15	$	2		Oilfield Services & Equipment	$	26	$	16	$	41	$	18
Industrial & Energy Technology	Industrial & Energy Technology	14		(1)			Industrial & Energy Technology	52		4		66		3
Corporate	Corporate	27		3			Corporate	17		5		45		8
Total	Total	$	56	$	4		Total	$	96	$	25	$	152	$	29

The following table presents restructuring and impairment charges by type, and includes gains on the dispositions of certain property, plant and equipment ("PP&E") previously impaired as a consequence of exit activities:

Three Months Ended March 31,
Charges by Type 2023 2022
Property, plant & equipment, net $ 15 $ (9)
Employee-related termination costs 31 8
Other incremental costs 10 5
Total $ 56 $ 4

~~OTHER CHARGES~~

We recorded other charges of nil and $66 million for the three months ended March 31, 2023 and 2022, respectively. Other charges for the three months ended March 31, 2022 were predominately in our IET segment for


	Three Months Ended June 30,				Six Months Ended June 30,
Charges by Type	2023		2022		2023		2022
Property, plant & equipment, net	$	(1)	$	3	$	14	$	(6)
Employee-related termination costs	80		21		110		29



Other incremental costs	17		1		28		6
Total	$	96	$	25	$	152	$	29

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 22

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

OTHER CHARGES

We recorded other charges of $6 million for the three and six months ended June 30, 2023, respectively, and $346 million and $412 million for the three and six months ended June 30, 2022.

Other charges for the three and six months ended June 30, 2022 were primarily associated with the discontinuation of our Russia operations. As a result of the ongoing conflict between Russia and Ukraine, we took actions to suspend substantially all of our operational activities related to Russia. These actions resulted in other charges of $334 million, primarily associated with the suspension of contracts including all our IET LNG contracts, and the impairment of assets consisting primarily of contract assets, PP&E and reserve for accounts receivable. In addition to these charges, we recorded inventory impairments of $31 million primarily in IET as part of suspending our Russia operations, which were reported in the “Cost of goods sold” caption in the consolidated condensed statement of income (loss). The 2022 charges also include a write-off of an equity method investment, ~~and~~ the release of foreign currency translation ~~adjustments. The 2022 charges also include~~ adjustments for certain restructured product lines, and separation related costs.

NOTE 17. BUSINESS ~~HELD FOR SALE~~ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

During the first six months of 2023, we completed the acquisition of businesses for total cash consideration of $282 million, net of cash acquired, which consisted primarily of the acquisition of Altus Intervention in the OFSE segment in April 2023. Altus Intervention is a leading international provider of well intervention services and downhole technology. The ~~Company classifies~~ assets acquired and liabilities ~~as held for sale (“disposal group”) when management commits to a plan to sell the disposal group and concludes that it meets the relevant criteria. Assets held for sale are measured at the lower~~assumed in these acquisitions were recorded based on preliminary estimates of their ~~carrying value or~~fair values as of the acquisition date. As a result of these acquisitions, we recorded $113 million of goodwill and $31 million of intangible assets, subject to final fair value ~~less costs~~adjustments. Pro forma results of operations for these acquisitions have not been presented because the effects of these acquisitions were not material to ~~sell. Any loss resulting from~~our consolidated financial statements.

DISPOSITIONS

During the ~~measurement is recognized in~~first six months of 2023, we completed the ~~period~~sale of businesses and received total cash consideration of $293 million. The dispositions consisted primarily of the ~~held for~~ sale ~~criteria are met. Conversely, gains are not recognized until the date~~ of ~~sale.~~

~~In July 2022, we entered into an agreement with GE to sell~~ our Nexus Controls business ~~a product line~~ in ~~our~~the IET segment ~~specializing~~to GE in April 2023, which resulted in an immaterial gain. Nexus Controls specializes in scalable industrial controls systems, safety systems, hardware, and software cybersecurity solutions and ~~services, and on April 3, 2023, we completed~~services. GE will continue to provide Baker Hughes with GE's MarkTM controls products currently in the ~~sale resulting in an immaterial gain.~~

~~The following table presents financial information related to the assets and liabilities of our~~ Nexus Controls ~~business classified as held~~portfolio, and we will be the exclusive supplier and service provider of such GE products for ~~sale~~our oil and ~~reported in “All other current assets” and “All other current liabilities” in our condensed consolidated statements of financial position as of March 31, 2023.~~gas customers' control needs.


~~Assets and liabilities of business held for sale~~	~~Nexus Controls~~
~~Assets~~
~~Current receivables~~	$	48

~~Inventories~~	40
~~Property, plant and equipment~~	2
~~Goodwill~~	~~230~~
~~Other assets~~	9

~~Total assets of business held for sale~~	~~329~~

~~Liabilities~~

~~Accounts payable~~	18
~~Progress collections and deferred income~~	39
~~All other current liabilities~~	19
~~Other liabilities~~	7
~~Total liabilities of business held for sale~~	83
~~Total net assets of business held for sale~~	$	~~246~~

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 23

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the condensed consolidated financial statements and the related notes included in Item 1 thereto, as well as our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Annual Report").

We are 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 ~~56,000~~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.

EXECUTIVE SUMMARY

Market Conditions

As we look at the second half of 2023, the ~~macro environment remains volatile with elevated recession risk for major developed economies.~~growing economic uncertainty continues to drive commodity price volatility globally. Despite ~~these challenges, we expect the supply-demand balance in the global~~lower oil ~~markets to gradually tighten~~prices over the ~~course~~first half of the ~~year. Factors driving this include China’s economy recovering, demand continuing to grow in countries outside the Organization~~year, we maintain a constructive outlook for Economic Cooperation and Development, and the Organization of the Petroleum Exporting Countries (OPEC+) remaining proactive in maintaining adequate and stable oil price levels. We expect this macro backdrop to still support a double-digit increase in global upstream spending in ~~2023, with multiple~~2023. We expect strength in international ~~projects being executed~~ and ~~the~~ offshore ~~development pipeline growing.~~markets to offset softness in North America.

We continue to believe that the current spending cycle is more durable and less sensitive to commodity price swings relative to prior cycles. ~~Factors driving this extended cycle include financially~~This is due to strong ~~operator~~ balance sheets across the industry and disciplined capital spending focused on returns versus ~~growth, and~~growth. We are seeing this in North America where both ~~independent~~major oil companies and ~~national~~large independent exploration and production companies have yet to deviate from their development plans despite the decline in West Texas Intermediate ("WTI") oil ~~companies balancing modest production growth with longer-term investments~~prices in ~~new energy.~~the first half of the year.

~~Another notable characteristic~~We also remain optimistic on the LNG outlook despite a significant decline in prices over the first half of ~~this cycle is~~ the ~~continued~~year as we continue to see the shift towards the development of natural gas and LNG. We see solid demand growth this year led by Europe and Asia with solid momentum across the industry for projects reaching final investment decisions. As the world increasingly recognizes the crucial role natural gas is expected to play in the energy transition, serving as both a transition and destination fuel, ~~the~~we believe there is a case for a multi-decade growth opportunity ~~in gas is steadily improving. This is driving operators of all sizes to dedicate more spending towards~~for natural ~~gas development, as well as LNG projects and associated infrastructure.~~gas.

Financial Results and Key Company Initiatives

In the ~~first~~second quarter of 2023, we generated revenue of ~~$5,716~~$6,315 million compared to ~~$4,835~~$5,047 million in the ~~first~~second quarter of 2022. The increase in revenue was driven by increased activity in our OFSE and IET segments. ~~Operating~~Income before income intaxes was $614 million for the ~~first~~second quarter of 2023 ~~was $438 million~~ compared to ~~$279~~a loss of $655 million in the ~~first~~second quarter of 2022. The increase ~~in operating income~~ was driven ~~primarily~~ by higher ~~segment operating income from OFSE. Income before income taxes was $760 million for~~volume in both the ~~first quarter~~IET and OFSE segments, lower charges relating to the discontinuation of ~~2023,~~our operations in Russia, which ~~included~~were recognized in the prior year, and a ~~gain of $392 million~~positive effect from the change in fair value on certain equity ~~investments. In the first quarter of 2022, income before income taxes was $187 million, which included a gain of $11 million from the change in fair value on certain equity investments.~~securities.

Our results in the first ~~quarter~~half of 2023 were impacted by the discontinuation of our Russia operations that occurred in 2022. Russia represented approximately 4%1% and 3% of our total revenue in the ~~first quarter of~~three and six months ended June 30, 2022, the majority of which was in our OFSE segment.

~~In 2022,~~As we ~~announced a reorganization of~~continue our transformation, we are driving actions to optimize our corporate structure and drive higher margins and returns. While reducing costs is one lever, we are also fundamentally redesigning the ~~Company from four~~organization to ~~two operating segments, OFSE~~simplify reporting lines, eliminate duplication, and ~~IET. To date, we have made great progress on this transformation, which is designed~~taking measured steps to ~~create a leaner, more simplified organization which we expect to enable faster decision making and better position the Company for the future of the energy markets.~~enhance our financial reporting systems.

We continue to invest in the Baker Hughes portfolio through strategic acquisitions and early-stage new energy investments. In April 2023, we closed on the acquisition of Altus Intervention, a leading international provider of well intervention services and downhole technology, which will enhance OFSE's existing intervention solutions business

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 24~~

and add new technology that can be scaled into new geographic markets. Also in April 2023, we closed on the disposition of our Nexus Controls business to GE. ~~GE will continue to provide~~

Baker Hughes ~~with GE’s MarkTM controls products currently in the Nexus Controls portfolio.~~Holdings LLC 2023 Second Quarter Form 10-Q | 24

Outlook

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.

•OFSE North America activity: ~~We expect~~ North American ~~spending~~activity levels are trending lower due to ~~continue to improve~~lower activity from private operators and in ~~2023, as compared to 2022, should~~gas basins driven by the recent decline in commodity ~~prices remain at current levels.~~prices.

•OFSE International activity: We expect spending outside of North America to experience strong growth in 2023, as compared to ~~2022, should commodity prices remain at current levels.~~2022.

•IET LNG projects: We remain optimistic on the LNG market long-term and view natural gas as a transition and destination fuel. We continue to view the long-term economics of the LNG industry as positive.

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, and energy storage. We expect to see continued growth in these businesses as new energy solutions become a more prevalent part of the broader energy mix.

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.

Corporate Responsibility

We believe we have an important role to play in society as an industry leader and partner. We view 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, achieving net zero emissions by 2050. We continue to make progress on emissions reductions, and reported in our ~~2021~~2022 Corporate ~~Responsibility report~~Sustainability Report a ~~23%~~28% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions compared to our 2019 base year.

BUSINESS ENVIRONMENT

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 six months ended ~~March 31,~~June 30, 2023 and 2022, and should be read in conjunction with the condensed consolidated financial statements and related notes of the Company.

Our revenue is predominately generated from the sale of products and services to major, national, and independent oil and natural gas companies worldwide, and is dependent on spending by our customers for oil and natural gas exploration, field development and production. This spending is driven by a number of factors, including our customers' forecasts of future energy demand and supply, their access to resources to develop and produce oil and natural gas, their ability to fund their capital programs, the impact of new government regulations, and ~~most importantly,~~ their expectations for oil and natural gas prices as a key driver of their cash flows.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 25

Oil and Natural Gas Prices

Oil and natural gas prices are summarized in the table below as averages of the daily closing prices during each of the periods indicated.


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022				2023		2022		2023		2022
Brent oil price ($/Bbl) (1)	Brent oil price ($/Bbl) (1)	$	81.14	$	100.87		Brent oil price ($/Bbl) (1)	$	77.99	$	113.84	$	79.58	$	107.20
WTI oil price ($/Bbl) (2)	WTI oil price ($/Bbl) (2)	76.00		95.18			WTI oil price ($/Bbl) (2)	73.54		108.83		74.73		102.01
Natural gas price ($/mmBtu) (3)	Natural gas price ($/mmBtu) (3)	2.62		4.67			Natural gas price ($/mmBtu) (3)	2.16		7.50		2.40		6.08

(1)Energy Information Administration ~~(EIA)~~("EIA") Europe Brent Spot Price per Barrel

(2)EIA Cushing, OK WTI ~~(West Texas Intermediate)~~ spot price

(3)EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit

Outside North America, customer spending is ~~most heavily~~ influenced by Brent oil prices, which decreased from the same quarter last year, ranging from a high of ~~$87.54/~~$88.31/Bbl in ~~January~~April 2023 to a low of ~~$71.03/~~$71.80/Bbl in ~~March~~June 2023. For the ~~three~~six months ended ~~March 31,~~June 30, 2023, Brent oil prices averaged ~~$81.14/~~$79.58/Bbl, which represented a decrease of ~~$19.73/~~$27.62/Bbl from the same period last year.

In North America, customer spending is ~~highly driven~~influenced by WTI oil prices, which decreased from the same quarter last year. Overall, WTI oil prices ranged from a high of ~~$81.62/~~$83.26/Bbl in ~~January~~April 2023 to a low of ~~$66.61/~~$67.08/Bbl in ~~March~~June 2023. For the ~~three~~six months ended ~~March 31,~~June 30, 2023, WTI oil prices averaged ~~$76.00/~~$74.73/Bbl, which represented a decrease of ~~$19.18/~~$27.28/Bbl from the same period last year.

In North America, natural gas prices, as measured by the Henry Hub Natural Gas Spot Price, averaged ~~$2.62/~~$2.16/mmBtu in the ~~first~~second quarter of 2023, representing a ~~44%~~71% decrease from the same quarter in the prior year. Throughout the quarter, Henry Hub Natural Gas Spot Prices ranged from a high of ~~$3.78/~~$2.71/mmBtu in ~~January~~late June 2023 to a low of ~~$1.93/~~$1.74/mmBtu in ~~March~~early June 2023.

Baker Hughes Rig Count

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.

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 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.

Rigs in the U.S. and Canada are counted as active if, on the day the count is taken, the well being drilled has been started but drilling has not been completed and the well is anticipated to be of sufficient depth to be a potential consumer of our drill bits. In international areas, rigs are counted on a weekly basis and deemed active if drilling activities occurred during the majority of the week. The weekly results are then averaged for the month and published accordingly. The rig count does not include rigs that are in transit from one location to another, rigging up, being used in non-drilling activities including production testing, completion and workover, and are not expected to be significant consumers of drill bits.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 26

The rig counts are summarized in the table below as averages for each of the periods indicated.


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2023	2022	% Change				2023	2022	% Change		2023	2022	% Change
North America	North America	982	831	18	%		North America	836	827	1	%	909	829	10	%
International	International	915	823	11	%		International	960	816	18	%	938	819	14	%
Worldwide	Worldwide	1,897	1,654	15	%		Worldwide	1,796	1,643	9	%	1,847	1,648	12	%

The worldwide rig count was ~~1,897~~1,796 for the ~~first~~second quarter of 2023, an increase of ~~15%~~9% as compared to the same period last year primarily due to an increase ~~in North America.~~

internationally. Within North America, the increase was primarily driven by the ~~U.S.~~Canada rig count, which was up ~~20%~~3% when compared to the same period last year, and an increase in the ~~Canada~~U.S. rig count, which was up ~~11%~~1% when compared to the same period last year. Internationally, the rig count increase was driven primarily by an increase in the Europe, Africa, and Asia Pacific regions of 42%, 24%, and 18%, respectively.

The worldwide rig count was 1,847 for the six months ended June 30, 2023, an increase of 12% as compared to the same period last year primarily due to an increase internationally. Within North America, the increase was driven by both the U.S. and Canada rig counts, which were each up 10% when compared to the same period last year. Internationally, the rig count increase was primarily driven by the Europe, Africa, and Latin America ~~and Middle East~~ regions of ~~19%~~30%, ~~13%~~17%, and ~~10%~~15%, respectively.

RESULTS OF OPERATIONS

The discussions below relating to significant line items from our condensed consolidated statements of income (loss) are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items. In addition, the discussions below for revenue and cost of revenue are on a total basis as the business drivers for product sales and services are similar. All dollar amounts in tabulations in this section are in millions of dollars, unless otherwise stated. Certain columns and rows may not add due to the use of rounded numbers.

Our condensed consolidated statements of income (loss) displays sales and costs of sales in accordance with 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.

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), corporate expenses, restructuring, impairment and other charges, ~~goodwill and~~ inventory impairments, and certain gains and losses not allocated to the operating segments.

In evaluating the segment performance, the Company primarily uses the following:

Volume: Volume is 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. It also includes price, 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.

Foreign Exchange ("FX"): FX measures the translational foreign exchange impact, or the translation impact of the period-over-period change on sales and costs directly attributable to change in the foreign exchange rate

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 27

compared to the U.S. dollar. FX impact is calculated by multiplying the functional currency amounts (revenue or profit) with the period-over-period FX rate variance, using the average exchange rate for the respective period.

(Inflation)/Deflation: (Inflation)/deflation is defined as the increase or decrease in direct and indirect costs of the same type for an equal amount of volume. It is calculated as the year-over-year change in cost (i.e. price paid) of direct material, compensation and benefits and overhead costs.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 27~~

Productivity: Productivity is measured by the remaining variance in profit, after adjusting for the period-over-period impact of volume and price, foreign exchange and (inflation)/deflation as defined above. Improved or lower period-over-period cost productivity is the result of cost efficiencies or inefficiencies, such as cost decreasing or increasing more than volume, or cost increasing or decreasing less than volume, or changes in sales mix among segments. This also includes the period-over-period variance of transactional foreign exchange, aside from those foreign currency devaluations that are reported separately for business evaluation purposes.

Orders and Remaining Performance Obligations

Orders: For the three months ended ~~March 31,~~June 30, 2023, we recognized total orders of ~~$7.6~~$7.5 billion, an increase of $1.6 billion, or 28%, from the three months ended June 30, 2022.

For the three months ended June 30, 2023, our OFSE segment recognized orders of $4.2 billion, an increase of $0.8 billion, or ~~12%~~24%, ~~from the three months ended March 31, 2022.~~

~~For the three months ended March 31, 2023,~~and our ~~OFSE~~IET segment recognized orders of ~~$4.1~~$3.3 billion, an increase of $0.8 billion, or ~~25% and our IET segment recognized orders of $3.5 billion, a decrease of $35 million, or 1%~~33% compared to the three months ended ~~March 31,~~June 30, 2022. Within IET, Gas Technology Equipment orders were ~~$1.9~~$1.6 billion and Gas Technology Services orders were ~~$0.7~~$0.8 billion for the three months ended ~~March 31,~~June 30, 2023.

For the six months ended June 30, 2023, we recognized total orders of $15.1 billion, an increase of $2.4 billion, or 19%, from the six months ended June 30, 2022.

For the six months ended June 30, 2023, our OFSE segment recognized orders of $8.3 billion, an increase of $1.6 billion, or 24%, and our IET segment recognized orders of $6.8 billion, an increase of $0.8 billion, or 13% compared to the six months ended June 30, 2022. Within IET, Gas Technology Equipment orders were $3.5 billion and Gas Technology Services orders were $1.5 billion for the six months ended June 30, 2023.

Remaining Performance Obligations ("RPO"): As of ~~March 31,~~June 30, 2023, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was ~~$29.6~~$31 billion. As of ~~March 31,~~June 30, 2023, OFSE remaining performance obligations totaled ~~$3.1~~$3.5 billion, and IET remaining performance obligations totaled ~~$26.5~~$27.5 billion.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 28

Revenue and Operating Income (Loss)

Summarized financial information for the Company's segments is shown in the following tables.


		Three Months Ended March 31,				$ Change		Three Months Ended June 30,				$ Change		Six Months Ended June 30,				$ Change
		2023		2022				2023		2022				2023		2022
Revenue:	Revenue:								Revenue:
Well Construction	Well Construction	$	1,061	$	883	$	178		Well Construction	$	1,076	$	936	$	140	$	2,137	$	1,819	$	318
Completions, Intervention & Measurements	Completions, Intervention & Measurements	909		781		128			Completions, Intervention & Measurements	1,090		886		204		1,999		1,667		332
Production Solutions	Production Solutions	938		825		113			Production Solutions	959		866		92		1,897		1,691		205
Subsea & Surface Pressure Systems	Subsea & Surface Pressure Systems	670		528		142			Subsea & Surface Pressure Systems	752		541		211		1,422		1,070		352
Oilfield Services & Equipment	Oilfield Services & Equipment	3,577		3,017		560			Oilfield Services & Equipment	3,877		3,230		647		7,454		6,247		1,207
Gas Technology - Equipment	Gas Technology - Equipment	827		543		284			Gas Technology - Equipment	999		556		444		1,826		1,099		727
Gas Technology - Services	Gas Technology - Services	591		581		10			Gas Technology - Services	658		542		116		1,249		1,123		126
Total Gas Technology	Total Gas Technology	1,418		1,124		294			Total Gas Technology	1,658		1,098		559		3,075		2,222		853
Condition Monitoring	Condition Monitoring	140		126		14			Condition Monitoring	154		133		21		294		259		36
Inspection	Inspection	254		212		42			Inspection	318		257		61		572		469		103
Pumps, Valves & Gears	Pumps, Valves & Gears	201		221		(20)			Pumps, Valves & Gears	217		194		23		418		415		3
PSI & Controls	PSI & Controls	125		136		(11)			PSI & Controls	92		135		(43)		216		270		(54)
Total Industrial Technology	Total Industrial Technology	721		694		27			Total Industrial Technology	780		718		62		1,501		1,413		88
Industrial & Energy Technology	Industrial & Energy Technology	2,138		1,818		320			Industrial & Energy Technology	2,438		1,816		621		4,576		3,635		941
Total	Total	$	5,716	$	4,835	$	881		Total	$	6,315	$	5,047	$	1,268	$	12,030	$	9,882	$	2,148

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 2829

The following table presents Oilfield Services & Equipment revenue by geographic region:


		Three Months Ended March 31,				$ Change		Three Months Ended June 30,				$ Change		Six Months Ended June 30,				$ Change
		2023		2022				2023		2022				2023		2022
North America	North America	$	992	$	823	$	169		North America	$	1,042	$	925	$	117	$	2,033	$	1,748	$	285
Latin America	Latin America	661		440		221			Latin America	698		509		189		1,358		950		408
Europe/CIS/Sub-Saharan Africa (1)	Europe/CIS/Sub-Saharan Africa (1)	581		660		(79)			Europe/CIS/Sub-Saharan Africa (1)	672		660		12		1,253		1,320		(67)
Middle East/Asia	Middle East/Asia	1,345		1,094		251			Middle East/Asia	1,465		1,136		329		2,810		2,230		580
Oilfield Services & Equipment	Oilfield Services & Equipment	$	3,577	$	3,017	$	560		Oilfield Services & Equipment	$	3,877	$	3,230	$	647	$	7,454	$	6,247	$	1,207

North America	North America	$	992	$	823	$	169		North America	$	1,042	$	925	$	117	$	2,033	$	1,748	$	285
International	International	2,586		2,194		392			International	2,835		2,305		530		5,421		4,499		922

(1)Impacted by the discontinuation of our Russia operations that occurred in 2022.

The following table presents segment operating income through to net income (loss) for the Company.


		Three Months Ended March 31,				$ Change		Three Months Ended June 30,				$ Change		Six Months Ended June 30,				$ Change
		2023		2022				2023		2022				2023		2022
Segment operating income:	Segment operating income:								Segment operating income:
Oilfield Services & Equipment	Oilfield Services & Equipment	$	371	$	213	$	158		Oilfield Services & Equipment	$	417	$	249	$	169	$	789	$	461	$	328
Industrial & Energy Technology	Industrial & Energy Technology	241		241		—			Industrial & Energy Technology	311		236		75		552		476		76
Total segment operating income	Total segment operating income	612		453		159			Total segment operating income	728		485		244		1,341		938		403
Corporate	Corporate	(100)		(105)		5			Corporate	(97)		(108)		11		(197)		(213)		16

Inventory impairment	Inventory impairment	(18)		—		(18)			Inventory impairment	(15)		(31)		16		(33)		(31)		(2)
Restructuring, impairment and other	Restructuring, impairment and other	(56)		(70)		14			Restructuring, impairment and other	(102)		(371)		269		(158)		(441)		283
Operating income		438		279		160
Operating income (loss)									Operating income (loss)	514		(25)		539		952		253		699
Other non-operating income (loss), net	Other non-operating income (loss), net	386		(28)		414			Other non-operating income (loss), net	158		(570)		728		544		(597)		1,141
Interest expense, net	Interest expense, net	(64)		(64)		—			Interest expense, net	(58)		(60)		2		(122)		(124)		2
Income before income taxes		760		187		573
Income (loss) before income taxes									Income (loss) before income taxes	614		(655)		1,269		1,374		(468)		1,842

Provision for income taxes	Provision for income taxes	(141)		(95)		(46)			Provision for income taxes	(171)		(181)		10		(312)		(276)		(36)
Net income		$	619	$	92	$	527
Net income (loss)									Net income (loss)	$	443	$	(836)	$	1,279	$	1,062	$	(744)	$	1,806

Segment Revenues and Segment Operating Income

~~First~~Second Quarter of 2023 Compared to the ~~First~~Second Quarter of 2022

Revenue increased ~~$881~~$1,268 million, or ~~18%~~25%, driven by increased activity in OFSE and IET. OFSE increased ~~$560~~$647 million and IET increased ~~$320~~$621 million. Total segment operating income increased ~~$159~~$244 million, driven by ~~OFSE.~~growth in OFSE and IET.

Oilfield Services & Equipment

OFSE revenue of $~~3,577~~3,877 million increased ~~$560~~$647 million, or ~~19%~~20%, in the ~~first~~second quarter of 2023 compared to the ~~first~~second quarter of 2022, primarily as a result of increased activity ~~in North America and internationally,~~ as evidenced by an increase in the global rig count. North America revenue was ~~$992~~$1,042 million in the ~~first~~second quarter of 2023, an increase of ~~$169~~$117 million from the ~~first~~second quarter of 2022. International revenue was ~~$2,586~~$2,835 million in the ~~first~~second quarter of 2023, an increase of ~~$392~~$530 million from the ~~first~~second quarter of 2022, driven by ~~the~~volume growth in all regions, primarily Middle East/Asia and Latin America regions, partially offset by lower Russia volume.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 30

OFSE segment operating income was $417 million in the second quarter of 2023 compared to $249 million in the second quarter of 2022. The increase in operating income was primarily driven by higher volume and price, partially offset by decreased cost productivity and cost inflation.

Industrial & Energy Technology

IET revenue of $2,438 million increased $621 million, or 34%, in the second quarter of 2023 compared to the second quarter of 2022. The increase was primarily driven by higher volume in Gas Technology Equipment and, to a lesser extent, in Gas Technology Services and Industrial Technology.

IET segment operating income was $311 million in the second quarter of 2023 compared to $236 million in the second quarter of 2022. The operating income performance in the second quarter of 2023 was driven by higher volume and pricing actions in certain product lines, partially offset by unfavorable business mix, decreased cost productivity, inflationary pressure, and higher research and development costs related to new energy investments.

Corporate

In the second quarter of 2023, corporate expenses were $97 million compared to $108 million in the second quarter of 2022. The decrease of $11 million was driven by savings related to our corporate optimization process.

Inventory Impairment

In the second quarter of 2023, we recorded inventory impairments of $15 million, predominately in the OFSE segment related to exit activities at specific locations. In the second quarter of 2022, we recorded inventory impairments of $31 million, primarily in the IET segment as part of suspending our Russia operations. Charges for inventory impairments are reported in the "Cost of goods sold" caption in the condensed consolidated statements of income (loss).

Restructuring, Impairment and Other

In the second quarter of 2023, we recognized $102 million of restructuring, impairment, and other charges, compared to $371 million in the second quarter of 2022. In the third quarter of 2022, we announced a restructuring plan in conjunction with a change in our operating segments. As a result, we continued to incur charges in the second quarter of 2023 primarily related to employee termination expenses driven by actions taken to facilitate our reorganization into two segments and to optimize our corporate structure. In addition, costs were incurred related to exit activities at specific locations in our segments to align with our current market outlook and to rationalize our manufacturing supply chain footprint. The charges in the second quarter of 2022 primarily related to the suspension of substantially all of our operations in Russia.

Other Non-Operating Income (loss), Net

In the second quarter of 2023, we incurred $158 million of other non-operating income. Included in this amount was a net gain of $148 million from the change in fair value for certain equity investments. For the second quarter of 2022, we incurred $570 million of other non-operating losses. Included in this amount was a loss of $426 million related to the OFSE Russia business, which was classified as held for sale during the second quarter of 2022, and a loss of $123 million from the change in fair value for certain equity investments.

Interest Expense, Net

In the second quarter of 2023, we incurred interest expense, net of interest income, of $58 million, which decreased $2 million compared to the second quarter of 2022.

Income Taxes

In the second quarter of 2023, the provision for income taxes was $171 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., which is partially offset by tax benefits related to uncertain tax positions. In addition, since we are a

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 31

partnership for U.S. federal tax purposes, any tax impacts associated with U.S. income or losses are recognized by our Members and not reflected in our tax expense.

In the second quarter of 2022, the provision for income taxes was $181 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances, restructuring charges related to our Russia operations for which a majority has no tax benefit, and income in jurisdictions with tax rates higher than in the U.S.

The First Six Months of 2023 Compared to the First Six Months of 2022

Revenue increased $2,148 million, or 22%, driven by increased activity in OFSE and IET. OFSE increased $1,207 million and IET increased $941 million. Total segment operating income increased $403 million, primarily driven by OFSE.

Oilfield Services & Equipment

OFSE revenue of $7,454 million increased $1,207 million, or 19%, in the first six months of 2023 compared to the first six months of 2022, as a result of increased activity as evidenced by an increase in the global rig count. North America revenue was $2,033 million in the first six months of 2023, an increase of $285 million from the first six months of 2022. International revenue was $5,421 million in the first six months of 2023, an increase of $922 million from the first six months of 2022, driven by the Middle East/Asia and Latin America regions, partially offset by declines in the Europe/CIS/Sub-Saharan Africa region, driven by lower Russia volume.

OFSE segment operating income was ~~$371~~$789 million in the first ~~quarter~~six months of 2023 compared to ~~$213~~$461 million in the first ~~quarter~~six months of ~~2022.~~2022. The increase in operating income was primarily driven by higher volume and price, partially offset by cost inflation and ~~unfavorable~~decreased cost productivity.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 29~~

Industrial & Energy Technology

IET revenue of $~~2,138~~4,576 million increased ~~$320~~$941 million, or ~~18%~~26%, in the first ~~quarter~~six months of 2023 compared to the first ~~quarter~~six months of 2022. The increase was primarily driven by higher volume in Gas Technology Equipment and, to a lesser extent, in Gas Technology Services and Industrial Technology, partially offset by unfavorable foreign currency translation impact.

IET segment operating income was ~~$241~~$552 million in the first ~~quarter~~six months of 2023 ~~flat when~~ compared to $476 million in the first ~~quarter~~six months of 2022. The operating income performance in the first ~~quarter~~six months of 2023 was driven by higher volume and pricing actions in certain product lines, partially offset by ~~inflationary pressure,~~ unfavorable business mix and cost productivity, inflationary pressure, higher research and development costs related to new energy investments, and unfavorable foreign currency translation impact.

Corporate

In the first ~~quarter~~ six months of 2023, corporate expenses were $~~100~~197 million compared to ~~$105~~$213 million in the first ~~quarter~~six months of 2022. The decrease of $5$16 million was driven by ~~cost efficiencies.~~savings related to our corporate optimization process.

Inventory Impairment

In the first ~~quarter~~six months of 2023~~2023,~~, we recorded inventory impairments of ~~$18~~$33 million, predominately in the OFSE segment related to exit activities at specific locations. In the first six months of 2022, we recorded inventory impairments of $31 million, primarily in the IET segment as part of suspending our ~~OFSE segment.~~Russia operations. Charges for inventory impairments are reported in the "Cost of goods sold" caption in the condensed consolidated statements of income (loss).

Restructuring, Impairment and Other

In the first ~~quarter~~six months of 2023, we recognized ~~$56~~$158 million of restructuring, impairment, and other charges, compared to ~~$70~~$441 million in the first ~~quarter~~six months of 2022. In the third quarter of 2022, we announced a restructuring plan in conjunction with a change in our operating segments. As a result, we continued to incur charges in the first ~~quarter~~

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 32

six months of 2023 primarily related to employee termination expenses driven by actions taken to facilitate the reorganization into two ~~segments.~~segments and to optimize our corporate structure. In addition, costs were incurred related to exit activities at specific locations in our segments to align with our current market outlook and to rationalize our manufacturing supply chain footprint. The charges in the first ~~quarter~~six months of 2022 primarily related to the suspension of substantially all of our ~~IET segment for~~operations in Russia in the second quarter of 2022, and a write-off of an equity method investment and the release of foreign currency translation adjustments for certain restructured product ~~lines.~~lines in the first quarter of 2022.

Other Non-Operating Income (loss), Net

In the first ~~quarter~~six months of 2023, we incurred ~~$386~~$544 million of other non-operating income. Included in this amount was a gain of ~~$392~~$540 million from the change in fair value for certain equity investments. For the first ~~quarter~~six months of 2022, we incurred ~~$28~~$597 million of other non-operating losses. Included in this amount was a ~~gain~~loss of ~~$11~~$426 million related to the OFSE Russia business, which was classified as held for sale at the end of the second quarter of 2022, and a loss of $112 million from the change in fair value for certain equity investments.

Interest Expense, Net

In the first ~~quarter~~six months of 2023, we incurred interest expense, net of interest income, of ~~$64~~$122 million, which ~~was flat~~decreased $2 million compared to the first ~~quarter~~six months of 2022.

Income Taxes

In the first ~~quarter~~six months of 2023, the provision for income taxes was ~~$141~~$312 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., which is partially offset by tax benefits related to uncertain tax positions. Further, the tax rate is also partially reduced by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances, which is partially offset by income in jurisdictions with tax rates higher than in the U.S. In addition, since we are a partnership for U.S. federal tax purposes, any tax impacts associated with U.S. income or losses are recognized by our Members and not reflected in our tax expense.allowances.

In the first ~~quarter~~six months of 2022, the provision for income taxes was ~~$95~~$276 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances, restructuring charges related to our Russia operations for which a majority has no tax benefit, and income in jurisdictions with tax rates higher than in the U.S.~~, partially offset by tax benefits related to uncertain tax positions.~~

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 30~~

LIQUIDITY AND CAPITAL RESOURCES

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 ~~March 31,~~June 30, 2023, we had cash and cash equivalents of ~~$2.4~~$2.8 billion compared to $2.5 billion at December 31, 2022.

In the U.S. we held cash and cash equivalents of approximately $0.7 billion and $0.6 billion and outside the U.S. of approximately ~~$1.7~~$2.1 billion and $1.9 billion as of ~~March 31,~~June 30, 2023 and December 31, 2022, respectively. A substantial portion of the cash held outside the U.S. at ~~March 31,~~June 30, 2023 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate ~~those funds~~certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

As of June 30, 2023 and December 31, 2022, we had $623 million and $605 million, respectively, of cash held in countries with currency controls that limit the flow of cash out of the jurisdiction or limit our ability to transfer funds without potentially incurring substantial costs. These funds are available to fund operations and growth in their respective jurisdictions, and we do not currently anticipate a need to transfer these funds to the U.S.

We have a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial banks maturing in December 2024. The Credit Agreement contains certain customary representations and warranties, certain customary affirmative covenants and certain customary negative covenants. Upon the occurrence of certain events of default, our obligations under the Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the Credit Agreement and other customary defaults. No such events of default have occurred. In addition, we have a commercial paper program with authorization up to $3 billion under which we may issue from time to time commercial paper with maturities of no more than 397 days. At ~~March 31,~~

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 33

June 30, 2023 and December 31, 2022, there were no borrowings under either the Credit Agreement or the commercial paper program.

Certain Senior Notes contain covenants that restrict our ability to take certain actions. See "Note 8. Debt" of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report for further details. At ~~March 31,~~June 30, 2023, we were in compliance with all debt covenants. Our next debt maturity is December ~~2023.~~2023, and we will most likely refinance this debt in the second half of 2023 based on market conditions.

We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the uncertainty created by geopolitical events, a global pandemic or a significant decline in oil and gas prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be negatively impacted. Additionally, it could cause the rating agencies to lower our credit ratings. There are no ratings triggers that would accelerate the maturity of any borrowings under our committed credit facility; however, a downgrade in our credit ratings could increase the cost of borrowings under the credit facility and could also limit or preclude our ability to issue commercial paper. Should this occur, we could seek alternative sources of funding, including borrowing under the credit facility.

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, we dispersed cash to fund a variety of activities including certain working capital needs, capital expenditures, ~~and~~business acquisitions, distributions to ~~Members.~~Members, and repurchases of our Units.

Cash Flows

Cash flows provided by (used in) each type of activity were as follows for the ~~three~~six months ended ~~March 31:~~June 30:


(In millions)	(In millions)	2023		2022		(In millions)	2023		2022
Operating activities	Operating activities	$	462	$	78	Operating activities	$	1,273	$	400
Investing activities	Investing activities	(229)		(266)		Investing activities	(414)		(430)
Financing activities	Financing activities	(250)		(469)		Financing activities	(501)		(868)

Operating Activities

Cash flows from operating activities generated cash of ~~$462~~$1,273 million and ~~$78~~$400 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively.

Our largest source of operating cash is payments from customers, of which the largest component is collecting cash related to our sales of products and services including advance payments or progress collections for work to be performed. The primary use of operating cash is to pay our suppliers, employees, tax authorities, and others for a wide range of goods and services.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 31~~

For the ~~three~~six months ended ~~March 31,~~June 30, 2023, cash generated from operating activities were 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). Net working capital cash ~~usage~~generation was ~~$132~~$65 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023, mainly due to strong progress collections on equipment contracts, partially offset by an increase in receivables and inventory as we continue to build for growth.

For the six months ended June 30, 2022, cash generated from operating activities were primarily driven by net losses adjusted for certain noncash items (including depreciation, amortization, loss on assets held for sale, loss on equity securities, stock-based compensation costs, deferred tax provision, and the impairment of certain assets). Net working capital cash usage was $133 million for the six months ended June 30, 2022, mainly due to the increase in receivables and inventory as we ~~continue to~~ build ~~for revenue growth, partially offset by strong progress collections on equipment contracts.~~

For the three months ended March 31, 2022, cash generated from operating activities were primarily driven by net income adjusted for certain noncash items (including depreciation, amortization, gain on equity securities, stock-based compensation costs, and deferred tax provision). Net working capital cash usage was $153 million for the three months ended March 31, 2022, mainly due to the increase in receivables, driven primarily by lower collections, and inventory as we built for revenue growth, partially offset by strong progress collections on equipment contracts.

Investing Activities

Cash flows from investing activities used cash of ~~$229~~$414 million and ~~$266~~$430 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 34

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 ~~$310~~$587 million and ~~$268~~$494 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively, partially offset by cash flows from the ~~sale~~disposal of ~~property, plant and equipment ("~~PP~~&E")~~&E of ~~$46~~$87 million and ~~$91~~$143 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively. Proceeds from the disposal of assets are primarily related to equipment that was lost-in-hole, predominantly in OFSE, and to PP&E no longer used in operations that was sold throughout the period.

During the six months ended June 30, 2023, we completed the acquisition of businesses for total cash consideration of $282 million, net of cash acquired, which consisted primarily of the acquisition of Altus Intervention in the OFSE segment. We also completed the sale of businesses and received total cash consideration of $293 million, which consisted primarily of the sale of our Nexus Controls business in the IET segment.

Financing Activities

Cash flows from financing activities used cash of ~~$250~~$501 million and ~~$469~~$868 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively.

We made distributions to our Members of ~~$192~~$384 million and ~~$185~~$369 million during the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively.

~~There were no Units repurchased during the three months ended March 31, 2023. During the three months ended March 31, 2022, we~~We repurchased and canceled ~~8.1~~3.6 million Units for a total of ~~$236~~$99 million during the six months ended June 30, 2023. During the six months ended June 30, 2022, we repurchased and canceled 14.8 million Units for a total of $462 million. ~~As of March 31, 2023, we had authorization remaining to repurchase up to approximately $2.8 billion of our Units.~~

Cash Requirements

We believe cash on hand, cash flows from operating activities, the available revolving credit facility, access to both our commercial paper program or our uncommitted lines of credit, and availability under our existing shelf registrations of debt will provide us with sufficient capital resources and liquidity in the short-term and long-term to manage our working capital needs, meet contractual obligations, fund capital expenditures and distributions, repay debt, repurchase our common units, and support the development of our short-term and long-term operating strategies. When necessary, we issue commercial paper or other short-term debt to fund cash needs in the U.S. in excess of the cash generated in the U.S.

Our capital expenditures can be adjusted and managed by us to match market demand and activity levels. We continue to believe that based on current market conditions, capital expenditures in 2023 are expected to be made at a rate that would equal up to 5% of annual revenue. The expenditures are expected to be used primarily for normal, recurring items necessary to support our business. We currently anticipate making income tax payments in the range of $500 million to $550 million in 2023.

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 32~~

Other Factors Affecting Liquidity

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. 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 ~~16%~~14% and in Mexico ~~13%~~11% as of ~~March 31,~~June 30, 2023. No other country accounted for more than 10% of our gross customer receivables at this date.

International operations: Our cash that is held outside the U.S. is ~~73%~~74% of the total cash balance as of ~~March 31,~~June 30, 2023. 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.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 35

CRITICAL ACCOUNTING ESTIMATES

Our critical accounting estimation processes are consistent with those described in Item 7 of Part II, "Management's discussion and analysis of financial condition and results of operations" of our 2022 Annual Report.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement"). All statements, other than historical facts, including statements regarding the presentation of the Company's operations in future reports and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words "may," "will," "should," "potential," "intend," "expect," "would," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "predict," "continue," "target", "goal" or other similar words or expressions. 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. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, the risk factors identified in the "Risk Factors" section of Part II of Item 1A of this report and Part 1 of Item 1A of our 2022 Annual Report and those set forth from time-to-time in other filings by the Company with the SEC. These documents are available through our website or through the SEC's Electronic Data Gathering and Analysis Retrieval (EDGAR) system at http://www.sec.gov.

Any forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk affecting us, see Item 7A. ~~“Quantitative~~"Quantitative and Qualitative Disclosures about Market Risk,”" in our 2022 Annual Report. Our exposure to market risk has not changed materially since December 31, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation,

~~Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 33~~

the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Exchange Act) were effective at a reasonable assurance level.

There has been no change in our internal controls over financial reporting during the quarter ended ~~March 31,~~June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 3436

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See discussion of legal proceedings in "Note 15. Commitments and Contingencies" of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report, Item 3 of Part I of our 2022 Annual Report and Note 17 of the Notes to Consolidated Financial Statements included in Item 8 of our 2022 Annual Report.

ITEM 1A. RISK FACTORS

As of the date of this filing, the Company and its operations continue to be subject to the risk factors previously discussed in the "Risk Factors" sections contained in the 2022 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

~~We have no~~Our barite mining operations, in support of our OFSE segment, are subject to regulation by the Federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to ~~report for the current quarter.~~this Quarterly Report.

ITEM 5. OTHER INFORMATION

None.

Baker Hughes Holdings LLC 2023 Second Quarter Form 10-Q | 37

ITEM 6. EXHIBITS

Each exhibit identified below is filed as a part of this report. Exhibits designated with an "*" are filed as an exhibit to this Quarterly Report on Form 10-Q and Exhibits designated with an "**" are furnished as an exhibit to this Quarterly Report on Form 10-Q. Exhibits designated with a "+" are identified as management contracts or compensatory plans or arrangements. Exhibits previously filed are incorporated by reference.




~~10.5~~10.1*						~~TMA Master Settlement~~First Amendment dated May 15, 2023 to the Credit Agreement, dated as of ~~February 13, 2023~~December 10, 2019, among ~~General Electric Company, Baker Hughes Company, EHHC Newco, LLC and~~ Baker Hughes Holdings LLC, ~~to settle disputes under~~ the ~~Tax Matters Agreement.~~lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
31.1**						Certification of Lorenzo Simonelli, President and Chief Executive Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2**						Certification of Nancy Buese, Chief Financial Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32**						Certification of Lorenzo Simonelli, President and Chief Executive Officer, and Nancy Buese, Chief Financial Officer, furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended.
95*						Mine Safety Disclosure
101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						XBRL Schema Document
101.CAL*						XBRL Calculation Linkbase Document
101.DEF*						XBRL Definition Linkbase Document
101.LAB*						XBRL Label Linkbase Document
101.PRE*						XBRL Presentation Linkbase Document
104*						Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 3538

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Baker Hughes Holdings LLC (Registrant)

Date:	~~April~~July 19, 2023	By:	/s/ NANCY BUESE
		Nancy Buese
		Chief Financial Officer

Date:	~~April~~July 19, 2023	By:	/s/ ~~KURT CAMILLERI~~ REBECCA CHARLTON
		~~Kurt Camilleri~~Rebecca Charlton
		Senior Vice President, Controller and Chief Accounting Officer

Baker Hughes Holdings LLC 2023 ~~First~~Second Quarter Form 10-Q | 3639


	Units Held by Baker Hughes		Units Held by GE
	2023	2022	2023	2022
Balance at January 1	1,005,960	909,142	—	116,548
Issue of Units to Baker Hughes under equity incentive plan	5,920	7,730	—	—


Exchange of Units (1)	—	75,957	—	(75,957)
Repurchase and cancellation of Units	—	(8,142)	—	—
Balance at March 31	1,011,881	984,688	—	40,591