BKR - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen and welcome to the Baker Hughes Company First Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. Jud Bailey, Vice President of Investor Relations. Sir, you may begin.

Jud Bailey

you. Thank and call. Baker everyone XXXX first to conference earnings welcome morning, Hughes the quarter Good

me our release with website CFO, today Here are be at Brian and Lorenzo can Worrell. our bakerhughes.com. Simonelli; The on earnings found we earlier Chairman issued our and CEO,

and provide of risks As reminder, filings future materially. the of our involve number of will performance assumptions. discussion course These Please statements SEC conference call, of cause and for a statements. this are and some review that the factors differ we actual during a forward-looking website not guarantees a to results of could

you As call Lorenzo. in of found our other and earnings release. over GAAP to I income the to know, With measures turn be reconciliations non-GAAP can that, operating will

Lorenzo Simonelli

for Good Jud. morning, us. thanks and everyone joining you, Thank

of quarter further pleased flow, cash efforts to strong are our We steps the with meaningful as in strategy and we generated our free results execution energy transition. drive our cost-out took to forward lead continued first the

During orders to the strong income, of to program margin operating solid drive quarter help and delivered our cost-out continued performance. execute OFS while TPS quarter, another

demand impact that As to remain recover optimistic of and the the of the will oil global XXXX, we cautiously from the global economy we rest ahead look pandemic.

up higher and cash of traded supportive publicly operators As and expect rising inventories. world, from OPEC+ should across with prices ramp the be flow vaccine oil rollouts industry. combined solid we to around discipline and gas the continued demand, oil This free rebalance

and we potential gas, world potential to LNG to we MTPA We as of we of longer of increasingly focus XXX see industry-wide on carbon end XXXX, of towards with and hydrogen markets demand the global Baker LNG continue new and The term discussions with resource-intense steering supported which recent Based decade. believe priorities called developed outlook governments capture more accelerate on government nations crucial anticipate demand leader We upside accelerate. XXXX. closely U.S. supporting natural Europe see cleaner XXX of energy XXX investment transition is demand continues policy Outside we With positive. decarbonize renewables, previously macro third-party energy the now Accordingly, be industries CCUS. gas sources to to this to some the to our sources future believe and technologies. like are and and aligning the that resilient by overall XXXX a mind, the the customers, as oil energy. as improving our areas to the demand view, to clean taking sources incentivize will shifts in policy directionally technology by as well transition. the right the green demand analysis view other around Hughes the in cleaner by position that Following appears XXX for steps strategic with MTPA of LNG these in in our energy to

three all a busy XXXX, strategy. to We making on of progress pillars have had start our solid

the continued in improvement On by the OFS remove we from core despite to first our costs the margins and evidenced the operations, pillar, of lower structural to as our transform business, revenue. identify

optimize and footprint to and continue order in reductions to to consolidation in is goal deliver cost Our further our processes infrastructure XXXX.

narrow actions, improve portfolio and streamline optimization continued to focus, overall we focus cost-out our In to operating efficiency. operations addition to on

our objectives. transaction venture to will long-term our during with As an which business. the helps portfolio subsea company, MHWirth a with Akastor’s our systems with contribute we an in agreement joint announced strategic drilling create we example, product quarter, This first align Akastor line

and the includes we our coil units fracturing hydraulic which related tubing Argentina, Additionally, in fleet, completed pumping assets pressure equipment. sale of

power, continued we assets industrial that utilities. footprint. to ever quarter, transaction to increasing On industrial strong the our range sectors, growth, in asset announced end, second offerings. commitment and including company, to The we and to our the our technology, identify digital range further use metals investing of business expand asset of and and manufacturing services software asset management the enables expand of broad Nevada ARMS and Reliability to accelerate acquisition across our monitoring management reinforces a in further of presence across sector mining, with utilizing Bently an This the To transformation a condition and the acquisition industrial opportunities ARMS into an end-markets. scale performance pillar Reliability, reliability first increase of for global the of

positioning to pillar total steps for and more The an energy to energy year. new of process process we the International’s announced environmentally-friendly our process. carbon energy-efficient SRI capture. adds mixed last transition technology of through decarbonize The exclusive enables immune for a provides available their capture to license of process offerings. build savings mixed On the also our We technology process operations. significant salt frontiers, based ammonia salt to and took third Compact capture development, our acquisition operators chilled cost mixed to which This Capture an cost salt out and reductions carbon industrial portfolio includes ownership commercially Carbon for

ultimate value This in cornerstone Chart develop targeting Industries. intention to FiveT Additionally, infrastructure investors, to fund investment designed is hydrogen and is of we €X the other hydrogen which our Plug to fund, recently an the billion, size Power the technology accelerate chain. approximately necessary announced and alongside invest

monitoring also services injection minimize systems progress Northern will integration development will and bring drill risers. development. subsea Coast Horizon, the scale the an footprint Norway. of costs for MoU storage is unique OFE commercially OFS for the project. agreement, Polaris to portfolio signed to supply with provide first and will transition trees, the can of compression project we and off the complete We customers. example of diverse our solutions. Under we supported quarter, great CPS a Enerji what control technology carbon the the portfolio the technology injection and technologies by Baker a carbon This on have supply to offerings, of In injection made efforts, energy delivery explore will building and of time and equipment Hughes bring will COX wells. DS and

As our we as pillars and energy our technology cash on strategic maintain three flow execute these company, evolution to continue and above will an free prioritize discipline capital. and our returns cost of we

with still as than for our the mitigate growth from the half first the expected be us has Now, The positive In some expect international multiple have outlook in a up potential customers, to select momentum also resulted year each we conversations which over the an across improvement signs in in discussions opportunities in this give prior I the In storms of in some full activity markets America, greater quarter strong such our Texas performance North firming are of upside its on in second you our Middle markets, weighted, expectations. second activity will confidence we XXXX. East, versus on recovery activity areas of should provides has regions America solidly Based further our and so and the helped Services, Oilfield the of for stronger year. In far winter key segments. the Russia. price increased commodity international as impacts Latin for customer half, XXXX. to strong project provide in course and update

higher, count is spending we public Although capital remains the that the and rig intact discipline the believe maintenance towards moving commitment among mode E&Ps.

on efficiency focus than through we remains of actions. somewhat anticipated, improved improving are pleased to faster for portfolio the we our and outlook While and margin see increasing business primary return profile OFS is the this

to current have believe in reduce reductions structural track OFS and operating environment. process margins and the continue Overall, given appropriately we cost operating remote our on that the We remains XXX size approximately on use the our XXXX product achieve significant operations. by improved our plan for lines execute made, increasing of to we to double-digit rooftops income facilities

Moving current and high-technology to operations and energy TPS, like applications, continue core our new compression focus we LNG, services. and balance initiatives aftermarket pumps valves to between

improving. has over the demand This for our demand with resilience combined the reflected in customers. LNG mentioned market climate optimism growth is has resulted pandemic, earlier, As outlook the in the our with I outlook. of conversations acceleration of been long-term also commitments, in improving The demand during

it Based XXXX, followed natural on this reaching gas of strong we of such nations goals targets. pipeline a net increasingly carbon China more and as favor in our of of their as by broader global necessary reach XXXX made X commitments, in in opportunities becoming clear is increasingly to X confident to expectation beyond. that FID outlook, zero projects As feel is in a coal as well phase-out

a For order the activity portfolio, positive remains non-LNG with segments our of solid outlook. TPS

for equipment a quarter, multiple platform and in we fixed awards booked Asia. During in generation the power Latin for compression and America for FPSOs first

resume optimistic are to maintain the For we in TPS as XXXX outlook equipment. in recovery and customers about spending for their some upgrade Services, cases, and XXXX

costs customer growth capacity maintenance. the reduce the have the we business, to that expect service optimistic customers the existing transactional Petronas extended are to is led a world. by meantime their basis, extension XX-year are LNG This pleased machine by facilities XX-year has production the for in The team one Contractual contract included longer upgrades, and LNG relationship seek global saving Services particularly a be On We technology contract reducing that emissions with areas contract in services a with of upgrade extension to Malaysia were and on in carbon and efficiency In Malaysia project, of recovery injections the and of XXXX. downtime between to between an the largest opportunities LNG. we equipment. term our receive Petronas as partnership impacted TPS outlook improve the the key helped increase

blends, meaningfully to emissions core the example, efforts. introducing agreement at to the run area to the with for the solution Novatek, with we their in first are we an liquefaction Novatek Together a of announced expect existing in As on LNG quarter, cooperation future. supporting upgrade an Yamal hydrogen decarbonizing grow trains we production, LNG first reduction

to term, next on the face With continue and more over foreseeable be and we to market of for portfolio years, Next, tree activity it XXXX a outlook that for still offshore improving few the environment. view awards we the the for will a dominated Equipment, to we Oilfield continue order believe the the that on prices deepwater levels. the XXs though basins sustain business cost will focus levels moving and Brent XXXX Longer rightsizing see in modestly by be increasingly well subsea industry challenging oil into future. optimizing demand low optimistic XXXX, below in difficult industry

an global offshore deliver venture to in with a and through the result will our to priorities. leading a equipment create quarter, transaction combination to company mentioned, and I joint with management provider experienced business. capabilities, STS drilling focused financial agreement and Akastor’s Akastor of delivery announced As in business of strength, we with solutions customer MHWirth first XX-XX full flexibility address This a a services integrated team range the the

to Solutions, first awarded signed America, and several our quarter. region. with with agreement experienced oil the Finally, recovery recover. in technology, below Panametrics the projects the that pilot our the in the secured We IQ the were demonstrate the our orders flare in our Flare in The well as for a This UAE end Gulf Flare presence. capabilities reduction customer gas the deployment was economy monitoring of by Digital operating In our results emissions a operators in third China line first as industrial industrial UAE. as IQ in began quarter, markets initial strong a expectations, led contracts advanced North global marking and to IQ in gas several to new and growing were we system, optimization solutions Flare orders although primarily we product

economy its will utilize improve methane deliver facilities secure important to reliability pilot efficiency to Drugs delivering orders engine fuel with across performance. pressure to to progress a our We on and improved emissions oil I were significant across over to in displacing priorities. sensor strategy competitor. focused decarbonization at we In as industries. flare the high-efficiency of growth strong market, Europe. changing technology global support first We we our vehicle is driving the Brian. the electric executed an reduce flare well customers, business, executing on and making technology Energy a cash and portfolio awarded our OEM delivering well-positioned Solutions combustion. broad the from Asia quarter, advantage technology are Technologies operations were strategic enable on performance also gas inspection recovery markets outcomes sites in the free near-term. the a we multiple customers a efficiency drug Longer enable turn LG dual to Waygate solutions focus for Overall, well-positioned for and will will and the customer and by on award With strategic our rapidly take Our better in Baker cost flow and our Hughes develop to and remain term, reduce shareholders. from battery that, for of delivering fuel we to With channel call several pleased aircraft our operational major cell energy

Brian Worrell

down obligation then increases in Thanks, by the ended at billion, Solutions X% details. into RPO with by driven Year-over-year, an increase at $XX.X Orders quarter the sequentially down Lorenzo. down billion, for XX% down company I $XX.X segment sequentially, the services begin $X.X TPS were and Digital in and performance X% orders billion, OFS OFE move billion, were declines offset sequentially. by partially sequentially. will Remaining Solutions. results XX%, by Digital and total driven $X.X and TPS. Equipment offset partially X% RPO up was OFE ended in and

charges. relate XXXX. quarter excludes The $XXX and offset an $XXX million equipment income in down in by declines and X.X separation quarter our TPS. previously segments. Year-over-year, XX% operating Our was was $X.X book-to-bill billion, to the driven quarter restructuring, for in was down first XX% other the declines was relate projects by year-over-year. in for quarter was projects up announced down Adjusted in revenue the Revenue million, operating charges ratio quarter in income and with to which quarter sequentially income Operating OFE four partially X.X. restructuring increase the OFS, and total company of million. was sequentially, all first was $XXX Adjusted Digital XX% Solutions in XX%, the book-to-bill

points. X.X%, quarter Our XXX XXX adjusted operating was was sequentially. points for Year-over-year, rate the up down adjusted basis income income our rate basis operating

improvement are in EBITDA continued was down and restructuring, the X% on actions was We which pleased $XXX sequentially of operating excludes million million, execution strong year-over-year. other largely basis, which with margin charges. separation a was restructuring in Adjusted XX% year-over-year driven by on the and Adjusted productivity. $XXX down and our quarter improvements operating EBITDA

we segment. well the history provides This quarter, EBITDA In morning new costs we earnings as were quarter by company EBITDA both release filed total this adjusted by and that with disclosing of X total for million began conjunction as quarter. in this our reporting in disclosure, reporting years Corporate an X-K company segment EBITDA. $XXX

million we For compared continued levels to the the costs was second corporate to and $XXX efforts. be amortization quarter, from Depreciation flat to first expect cost-out in quarter. expense quarter slightly down

in share the $XX share decline expect quarter, second D&A in Net and to be Included expense of matters. flat CX.ai, per the $XX the the quarter was by settlement of in half $X.XX. from in partially a in to For loss of we offset were due current roughly per $XXX million gradually expense loss $XXX change the to of year. Adjusted interest value was our the fair the is per share sequentially was reversal GAAP investment $X.XX. GAAP certain Income of second loss million. legal accruals tax million. earnings million

restructuring quarter first in cash for Turning Free separation statement, to and million. related free quarter was payments the cash includes the $XXX cash cash of million flow flow flow the activities. $XXX to

of particularly separation cash lower and We cash improvement The a performance restructuring free the by with was and pleased sequential payments. largely working driven are flow quarter. in our capital level

to primarily capital less free cash second to trends. working favorable expect decline the For sequentially due flow quarter, we

significantly flow better line to improve be we For significantly and to payment. in separation and or XXXX historical CapEx higher free will versus with lower modestly be year, XXXX still the drivers and free for restructuring than The versus expect levels. income, cash cash total cash flow lower operating

a with to Akastor Akastor’s Lastly in product Systems the our an Drilling joint agreement mentioned that line as MHWirth. Subsea company subsidiary, quarter, we will wholly-owned venture bring create with reached Lorenzo together first

to expect conditions. the transaction continued in We closing optimizing second focus our close on portfolio. the reflects subject the This to year, customary of half transaction our

Now, down X% in America growth sequentially, thoughts with revenue and sequentially. strong on led sequentially, delivered Middle the environment. and Russia detail International America increased construction billion, mixed a team businesses, results walk revenue give North East. our and chemicals. in of segment well land Services, a outlook in in you revenue the X% through in the declines was our North OFS I the going forward. X% In will more market down quarter by Oilfield Gulf by Mexico quarter $X.X was in declines you solid offset the

first restructuring X% the year of and The over XX.X%. production-related in decline quarter over Despite revenue. versus our our total on XX% XXXX, first EBITDA points grew X% robust revenue improvement accounted market income under to $XXX revenue, rate driven team OFS businesses margin executed of OFS our XX cost-out a Despite million The year-over-year the was basis quarter, well XXX points last rate rate difficult up programs for of in cost-out while margin margin very OFS by initiatives. operating America conditions. sequentially, to expanded the for decline the XX% For was in North basis X.X%.

seasonal by half a second over second ahead we As be look stronger quarter, we international should a to increase the the activity, recovery to cyclical which of the expect in see year. followed

expect momentum North the a expect completion and international second mid-single segment activity the digit recent we In we revenue sequential quarter our in the U.S. in range drilling increase to a America, in on As to result, continue. basis. land

in growth high-single in to digit range. to North American the expect be we mid result, As a revenues OFS

cost-out yield improvement margin further rate reduction our We efforts expect results. volumes the as through steady improve year and solid and

in outlook positive what with our on fourth still customers. our from developing year industry multiple we second earnings For call. expect quarter XXXX, signs modestly the improved has recovery we full a Internationally, from half shared activity,

However, opportunities, North be these without we in recovery and strong digit have from clear increase the year-over-year private visibility prices on commodity near-term incremental a recent improved basis. range In the mid-single revenue of America, to down expect our some international E&Ps, the on in outlook.

we modestly and to is recovers, basis. that likely drilling activity be believe year-over-year completion higher a on activity As

exit portfolio North our expect and overall rig last given to year. We our businesses trend, the lag American spending several revenue industry and commoditized mix count of

Although customer I rig signals reiterate positive to are count to a remain prices around spending will moving margins returns. pursuing and have we and revenue. commodity be on in that and are We focused increased accretive projects that direction, want chasing not

revenue a OFS full modestly in strong XXXX. our margins to year, actions may OFS dynamics, the be to these Given for in translate we expect down but cost-out improvement

Oilfield and year-over-year, quarter is were orders along flexibles, in was the services flexibles. down higher was XX% offset which down Subsea was million, in to and SPS million, XX% $XX XX% primarily million, Drilling Drilling income help and SPC and year-over-year. Operating Systems volume growth with by Revenue Equipment, Moving $XXX Flow, Subsea $XXX up activity by in driven $X program, in by partially offset million down disposition partially the services, Systems. in softness subsea declines This by sequentially. year-over-year driven our of and SPS cost-out from

For flexibles backlog sequentially, second driven quarter, we to lower and expect by the conversion. SPS revenue decrease

to to remain first quarter close We income levels. expect operating

reassess we portfolios XXXX, their project remain offshore year as challenged and markets the selection. expect full the operators For to

the We due environment offshore revenue be a continuation of XXXX XXXX. to in double in a digits difficult likely down a to and year-over-year expect on order OFE intake lower basis

XXXX, be our remains in will as income, offset our should in generate decline goal cost-out down volumes. efforts revenue operating to Although the positive

up quarter quarter this quarter TPS particularly X% and solid The Next, volume I were up production up Latin a XXX%, Operating margin Asia. margin strong transactional on services quarter X% equipment from XX% cost in our points year-over-year. partially equipment down strong XX% versus $X.X execute supported and another change awards Equipment from and generation over delivered quarter very up from pleased LNG fixed the in services. up year-over-year. Service year-over-year, was the billion, revenue Revenue basis in orders in billion, cover income revenue year. X% higher year. multiple with Turbomachinery. by were Services equipment XX% execution. the $X.X Equipment year-over-year, driven was we XX% year-over-year. orders was FPSOs backlog. on by XXX declines was up onshore/offshore offset were the for will prior with the by and Orders and execution for productivity, Operating in team XX%. were versus in for power given compression up Orders to was $XXX by a year-over-year, platform We driven prior primarily XX.X%, contractual America as the mix mix. revenue million, continue higher were rate to improvement the

of equipment the roughly a revenue technology With roughly quarter, an mix due margin of TPS in be we this conversion. revenue backlog equipment second second to expect to flat sequentially and versus XXXX based spending. flat For rates the to higher expect increase expected revenue we on be outlook, quarter

full year and the to growth double growth, year-over-year in backlog we modest TPS conversion expect digit driven XXXX, services. For revenue generate equipment by TPS

expect higher We in to roughly rates year-over-year. revenue margin mix equipment result flat a of

higher and volumes growth solid operating cost based on anticipate income productivity. still improved in we However,

by driven XX% reduced by Operating million, $XX lower partially XX% by seasonality. lower pipeline Sequentially, as productivity. down intake and a volumes by for quarter across down improving process and economic typical Technologies. in XX% volume, and year-over-year, gas Nexus We revenue aviation income year-over-year. offset well solutions, quarter the most opening to lower services end and in quarter orders was as X% orders orders primarily income challenge. global volume. the cost year-over-year, for were digital by was backlog, down in operating $XXX up markets, million, driven Finally, saw lower environment. X%, Sequentially, were for up a the driven XXXX Controls, industrial XX%, the Revenue in order driven remains $XXX by while Sequentially, million, Waygate down oil was driven growth due was

sequential For digits. into revenue to strong the margin high-single and see expect we operating growth second rates the quarter, back

XXXX, DS modest driven costs, growth For markets. the we a volumes higher in by on end full in OFS, year-over-year back continued a strong get a with expect delivered digits and basis, strong rates quarter With a primarily year. year cash believe low-double on TPS in industrial flow. margin can focus we recovery along revenue the we for exceptionally to full free and Overall,

our While that, turn the we are back DS faced to challenges Jud. confident as of volume call will ability rest and in our over execute OFE we in businesses, to With the year I unfolds. the

Jud Bailey

Thanks for Brian. open Operator, questions. let’s the call

Operator

[Operator first the from you. Meakim Thank with line JPMorgan. Our comes Instructions] question of Sean

Your line is now open.

Sean Meakim

morning. you. Thank Good

Lorenzo Simonelli

Hi Sean.

Brian Worrell

Sean. Hi

Sean Meakim

So, free cash I I flow. Brian, on your appreciate wanted to comments. start

like nicely moving benefit. will their the cash collections in the You it comments. is are seasonally challenging customers maybe prepared XQ cash flow profiles they the But Particularly, like without the sounds flow of sounds through positive than more be year. half feeling your for walked It back collections. free last with parts comfortable even quite in did

the you billion on So, type we you flow about low the you – to said think number. like levels. should higher started how you That get $X historical year cash given sounds to the expectation maybe in of start, back start how Shouldn’t expect to had based free expectations that year? strong move like full

Brian Worrell

really of exceptions. is the on that Yes, with doing intact, we laid how is And flow And we some couple pacing would but Sean. pointed largely a are were say when have framework the out out with inventory. by year. so pleased January receivables that free far Look, positive cash driven in around still I you been and then we this one, work we call

far working is better so think likely will better this slightly year. EBITDA capital I and be pacing

indications And pretty improving chain for have capital our supply cash we good worked So, talked full processes. before, flow performance. about on a and year with lot free are working the we as you

recall pointed really lot of overall. cash collections in systems and you gotten cash I we very is in are managing efficient inventory think place. out, focused then And becoming I company-wide on We will incentive think is and conversion. flow have important, And a free we our more cash structure more this

together, that’s capital just TPS this I to little be tailwinds as a fluctuate free reminder, the talked when dynamics of year, OFS flow just the Sean, over cash we activity And each cash year. all depending should the be should we progress income source about be are free I CapEx that can better that there similar for other backdrop the levels lower January. put look, of flow slightly of the collections, than cash Operating a really think segment, so year, about and but certainly And for working do on activity, course it should are the for in the with a higher; of here. of drivers talking have what year: been the

in second half in level, We around the and Sean, had first then thing and as we While the year. in mix million of the $XXX And would the second the off biggest charges. expect of earnings is I you restructuring are same higher, that have cash know, refunds taxes quarter should be to lower income. the the the be because some reduction and taper separation-related just quarter. then the of

to overall and So, and we that made the feel said, year have as start performance. you good the like progress about pretty the the

Sean Meakim

Yes. It’s very encouraging. Thank you, Brian.

then OFE. returns. you in understandable. the you seems transformation portfolios the really terms But that’s say cycle. you so Lorenzo, would efficiency of where more for are later have operating OFS offshore levered, focused adjustments? your lift, to margins still have where boost operations continuing. in It’s about are X and transforming like each the So segments it’s and These in on thinking Progress is OFS OFE been and and portfolio

Lorenzo Simonelli

Look, shot actions OFS. continue first. will And with we last momentum their in the quarter, but digits. we momentum everything based accretion certainly about, that in got digits the on executing we still we to double to that I think the are working operating this by Not capability. that that that rates they lot believe have good I you on and would here. here the I should the good feel have incredibly actions, And I team cost-out we with a the have actions team and Claudia the in hard year margin and and I fourth the really in we do, jump taken have are on, about at talked I really created, executing that margin The on to-date Sean, over a real done outlook working with is is team been continuing say, high-single at about to have the seen still the Yes. feel in to have have Maria well. good execute and execution

see should the year levels of a activity the improvement, margin throughout you look, obviously, course OFS. steady depending So on in

say way. beginning as think this have stabilized. I are year. we great well are to business would our we I here to margin we So, a And be execute going on Processes continue are to

Pleased out You the sorry, or a that a with – pointed OFE bit joint is lift. OFS heavier have. of announcement venture we

portfolio the And step We overall close expect that that’s think in second our half. optimization. I a good to in

overall the cost-out OFE, as market. are the of business the across offshore to pressure on For in continuing remainder we focus we see

and volume cost-out just to levels footprint we we and the I And those offset year reducing want given with see, the We activity backdrop have this think that lower been volumes. to align headcount with pressure actions. the

run be given evaluate long-term. continue will but it over So, a better, and we we business still not how that’s margin differently the needs environment. this And this where profile market to to better

Brian Worrell

just add. would I Sean,

execute. pleased of of X look first this with the continue are we strategy core. crucial that pillar, our has as doing it’s year. executing in fits good transform to that pillars, really the we the a at through and team been And the the But performance you going and If job on the

Sean Meakim

you, Thank both.

Operator

Thank you.

the comes question ISI. of next with West line from Our James Evercore

now line Your is open.

James West

Thanks. morning congrats the Good cash in first on the and quarter. guys free flow solid

even with risk. Lorenzo, asset fuel that it was market future. LNG much LNG interesting. there view crosscurrents, So upgraded There some with the at fuel the a is further now, be all, suggestion don’t our standard of in suggesting of your some some is – We view has and right LNG then, course, that. agree and is that of And our could in some of but landed is course, transition is

am see LNG? and you the I And upgraded numbers see about are overall – that are so base, thinking your customer Why how outlook you talking they or how LNG. for the curious, today about you

Lorenzo Simonelli

James. LNG Yes, the mentioned as outlook actually and the see upside. positive prepared we in for long-term we remarks, And intact remaining seeing

from going million Also, gas, robust XXX And coal you to to play XXX demand to XXX to what to XXX the the at from natural coming of of if million so resilient. tons very China. a are decade backdrop, by XXX that energy to Really, from as demand there And as to transition have XXXX, move outlook nameplate the look tons taken given capacity. some look going couple from we which we to to MTPA commitments a And have are countries for said factors relative are for we million demand million good play end XXXX into from tons a of at also of And such at the perspective, previously you is here. approximately getting India, continuing was the means out. see XXXX. you tons up XXX the MTPA

million we to years. incremental we to XX tons an tons to that’s are course FID next suggests XXX that million before. that XXX X the So, have million X tons tons And indicated to XXX of over million another than years the going

taking discussion the good in see discussions feel is we a So, with FIDs about there of outlook. X place. with lot outlook. X the robust This off-take I still demand year, that to And FIDs customers,

at some expansions you had backdrop, Qatar. have you in the As look

have had announced locations. expansions in some You other

the America from at the off-take some out just projects see looking gas, way You going that And to to commercially, users to natural there are really encouraging clearly it’s the as which well. again, several got North coal of made they large LNG of agreements. are the applies on which being in have announcements transition by to

forward. feel we So, the about good go as outlook

James West

Right.

must be busy guy days. Rod sense. perfect pretty these makes That Okay.

several So, we quarters? outlook go order the TPS how next should then to about as think for the we

Lorenzo Simonelli

Yes.

in As change year-over-year outlook the for perspective. could what we overall, be think booked mix orders, we roughly still from ‘XX we similar look TPS a looks ‘XX some XXXX. at to There order and

FID followed I of XXXX, mentioned, projects pipeline X side, to by move a reach LNG the in forward XXXX. On to beyond X projects robust as to projects likely LNG

we positive momentum, a as be to before. continues that have indicated So,

is mix For roughly be but move line is around opportunity non-LNG in and The an the a XXXX. to equipment, opportunity could we areas, other believe onshore there XXXX for between with bit the valves little offshore same. and in

we’re offerings see, to There and also bring the outlook technologies and for the as will a customers that activity, the over but mentioned Services, that and with even ‘XX, in minimal for forward-looking, traction, of optimistic upgrade traction with resume that years. is on our equipment. are and in ‘XX We bringing look on some scene pickup numbers, customers of next getting as discussions though maintenance hydrogen. cases, CCUS possibility their some there relative starting And to we’re increased then couple we’ve some more for to also the

real what no more robust. from change again, it’s So and we becoming said,

Operator

you. Thank

Bank line Our with of next America. of the question Chase Mulvehill comes from

now Your line is open.

Chase Mulvehill

Hi, everyone. good morning

Lorenzo Simonelli

Hi, Chase.

Chase Mulvehill

I take guess of able more? maybe But today chilled think be to minute just Lots to and and that you will offering the mixed a around on And Baker salt value process investing days differentiate offerings the broadest technology you’ve capture chain? investor the these include the parts chain CCUS comprehensive got what the you side, value the CCUS. are of of interest technologies. amines ammonia, CCUS. finally, also could across speak Where with most? I’ll you your one entire start And

Lorenzo Simonelli

bit broader we’ve process and Yes. spending Chase. is been And much it CCUS, as aspect. time a than of quite then on said, just Sure, the you

portfolio from perspective, we play uniquely As areas a value you the at multiple I chain. positioned think across look because of we’re Hughes can Baker

at look the as as integrity from as monitoring. longer and we’ve and well modeling, and subsurface If at it look you construction, a reservoir got design, services storage then well like you reservoir also, term post-combustion consulting and capture, also evaluation

key projects the again, types is processes for going to then mid-scale projects. capture cement is for which this smaller to and which announced offshore and from key capture technologies The state-of-the-art salt perspective, allow technology a process CCUS we which will chilled different we key. large-scale recently capture, at International acquired usage, end going industries. which lower about utilizing also the which we and of during are be rotating that combat for think be The SRI we and again, and available you Turbomachinery, process, we ammonia got, energy have. to mixed of that our industries today, As the is for be going as as you’ve factories carbon another already commercially well ideal that technology, carbon water last is, efficiency. mentioned mentioned equipment be greater is And license some solvent-based year, reduce of bed process, the

from building as we’re well here So the value across a portfolio technology standpoint a chain. across CCUS

Chase Mulvehill

an color market appreciate maybe to there. I what talk market for a addressable to hydrogen? also CCUS this, see speak you could quick Yes. maybe as the as the maybe But follow-up chain? the addressable then to And across value you

Lorenzo Simonelli

focusing in on announced then energy being Sure. we the XXXX technology And transition. an energy company

as technology today; investments evaluating value where really to may areas XX for also different evolve our competitive chain. play of technology looked time So to market three months can to the other things: and opportunities how it and remain we’ve of course over at we the spent the required also the our in areas. relates ourselves And a last the these lot XX

So, be look to XXXX. to the billion $XX billion at between CCUS, for talking addressable to market $XX we by ourselves specifically

the a of mid-case tons and market range like million CCUS storing XXX of and also this the covers carbon Hughes monitoring, we compression mentioned, capture assumes Now a really can that Baker XXXX. technologies addressable currently full offer technologies, of relatively by

to to being for On looking us And this market important an play going been be again, forward. about good for time. it’s some market. this we’ve in feel able So hydrogen, going at

we’ve present our know some of technologies key You in hydrogen been with already.

out As we ourselves an to – addressable of we billion billion. XXXX, $XX to market see for look $XX us for

across in going technology higher can going again, think be I products keep this is mind the than chain. that be on of technology focused solutions address to the our technologies value better to way. a evolving. wide encompass And also range you and and market the we’re conventional it’s where got to that But

Chase Mulvehill

Lorenzo. Thanks, Perfect.

Lorenzo Simonelli

Thanks, Chase.

Operator

you. Thank

Our with next Marc question comes line from Cowen. Bianchi the of

Your now line open. is

Marc Bianchi

imply technology second you to XXX I point flat XXXX, Thank guidance like you. I And TPS. heard so. go with to was like was the for would be sequential to quarter basis rate some that, that think quarter if back for right, I’d think the the I And decline to second related of setting. margin mentioned which or

talk towards, remainder progress the would spending, and year? allocated and could about you that’s maybe technology the So the to us what over that how then of

Lorenzo Simonelli

And projects keep will that TPS Yes. little Marc. quarter-to-quarter, say, look, thing mix, In rep of and the projects remarks, the the Margin we offshore from the that LNG pretty on did as to we but production year to of bit the prepared rate projects. Yes, backlog. of talk fluctuate there have you margin to equipment the also likely range the differentiation in industrial and some backlog set we given range a the just our of and backlog, mix throughout about in of turbines to is things. as large due broad the offerings you be depending service There can described. the on in diverse pet I’d mind got some onshore execute that

see So look, quarter-on-quarter, that’s you based on fluctuation can – some that.

say, focused XXXX, And technology products that a new quarter markets and the given portion some goes, talk total then but energy far of bringing in we serves company we’re ramp-up hydrogen Lorenzo we are you’ve and on CCUS I’d on. look, areas to in as us some As a roughly $XXX storage. about and that TPS of end spent and heard of around frontiers the makes bit decent level offshore overall production, it million market LNG at see R&D. in from second we’re some the a also in going standpoint, described markets new a traditional to across and the about. onshore like just up

have and We turbines turbine hydrogen can position a hydrogen competitiveness TPS some is forward. in the gas more base. we’re new hydrogen. that run some spending and manufacturing equipment standpoint got already cost we’ve There broader we that on work expand services recip to And turbine XXX% specifically, to some compressors both some and then, So do advanced development. more a high-pressure additive for from today and in to our spend look, going work more on that increased program in

So look, this – strong really it’s franchise. a great business, a

a will think You have overall do in And this even make income investments And some standpoint. despite see year an we where that, sense area key TPS this margin strong markets. a our at and positioning is from stage.

Marc Bianchi

if through could just exceeding are of tell with sort you meeting the go us don’t? Okay. was pretty to where that but the to years. consequences you revenue lot I I CX.ai. visibility curious lower that COVID, that, what your that. few wanted as about is believe have for that. still sizable restruc if the commitment? you unrelated, you I’m What or next And The is commitment with the a ask stand during question, revenue Thanks next a number we

Lorenzo Simonelli

element was long-term Yes, and a with deployment to the relationship contract it of of Matt. Really, being and on The long-term. restructuring the capabilities the it’s important of our relationship intelligence customers. very good seen also CX.ai We’ve a good strategic artificial traction, strategic based the to remains us pickup.

industries. associated a also We’re and number of in deployments the industry across

products externally very to feel releases CX.ai usage the ourselves So about internally We’ve process as of we’ve about that we’re drive well. that efficiencies as different making. talked the well good of progression within done our as

good pace and on with the feel future So CX.ai. about

Operator

Thank you.

question from with Scott next of comes Citigroup. Our the Gruber line

now is line open. Your

Scott Gruber

Yes. Can you hear me?

Lorenzo Simonelli

Yes. Hey, Scott.

Scott Gruber

buyers near the to of hear. buyers, Not to starting I operator to wanted from towards great hear and or to kind carbon-intensive is carbon-intensive request started will future hear of this morning. theme shifting project that good but just starting particularly request gas, on trend or coal Asian the gas? less only turbines hydrogen The to you do stay buyers, less think to you manifests And more driven? the LNG. in be actually blends carbon-intensive gas? Yamal from of Have less Hey,

Lorenzo Simonelli

theme have going started intensity continue. Scott, been imagine, disclosures also that And and starting a a look customers this that people their in of also are our a industry we to that, LNG helping a more the time. the got apply So we’ve got the of Customers LNG on more as to of that reduce see at make. And can upgrade that we’ve a to We our on carbon number we can as already cargoes. capabilities we that’s long you trend think are the do there equipment end transparency. carbon We’ve the towards actually because we disclosure, intensity. And customers is and side, around hearing move back to can new CCUS. measure that

the which So we LNG is about customers outlook. the intensity. about good drive feel a the support feel energy destination transition We fuel way transition. we good in the And for carbon lower to also to our continue

Scott Gruber

potentially that back with want Got clarification, participate now about in operators the to you the And to Gulf something that Is And I Coast. project have you oil talking just look with along you these mega just U.S. come it. for company in fair? that project them? area Are discussions biggest some the even some the CCUS. the them? seemed a Obviously, engineering. vast ventures, with is Exxon. of with and low-carbon on So on worked if with still of expertise you maybe a this that correct? subsurface would the just Is your majority like in offering portfolio and play Is like be overlap primary your it project to

Lorenzo Simonelli

space back. will – a an and it evolving emerge. a Scott, is I is fair. step this would again, is And that ecosystem take then is that

within LNG, across can API, that there to a If different processes ConocoPhillips, an you be LNG, utilized, board. is the various parallel a think of

companies that You’ve where appropriate. operators apply our their equipment that. as well We our got we also as apply have to processes And different processes. integrate as well different own processes. their with We

require, we builds. optimize. definitely will So different scale, an participate projects to modules, will it is an work ecosystem Also, of perspective, stick different where all engineering we these from and

we chain. scale, it’s that being as will to from the And marketplace it dependent a evolve forward. it LNG and participating so But on lot we along large mid-scale, I look and or will develops, go it’s whether at value be as going a to small-scale similar very be

Operator

Thank you.

line question Barclays. from Our of comes David next with the Anderson

Mr. your is [Operator is if Morgan on Connor Anderson, from please line. mute, of open. line Lynagh unmute your Your line line next now the Our question Stanley. comes with Instructions]

open. now is line Your

Connor Lynagh

suite I’m this you have sure I discuss link for maybe Yes. if what was you’ve Can Thanks very I this Aramco. of what detail days? you the well much. these to greater And the can much is that sort deployed guys But broadly, before. spoken relative more Saudi to just there? discussion of the your about little customers offers not with interested service competition you upstream software then a in of offer out some guess,

Lorenzo Simonelli

Yes.

in with we’ve an from across activity. and also of capabilities existing the competitor, better So a again, operations and perspective very actually the the artificial board, with remote and pleased And intelligence customers. this What digital and We’ve from number also with the if to allows Aramco. you link, themselves deployments our largest deployment at that got our the look deployments. it’s one a understanding one upstream visualization, from it’s web business, transformation, on we of is of reduce been the we’re perspective, displaced visualization an And drilling investing a wells downtime.

continued investments digital drive focus see is for that’s taking here be productivity customers, and the place. so we to the And with for enabled our where our

Connor Lynagh

if was effectively, deal, you evolving just into sticking your see discuss theme, where Reliability business it. wondering time? offering with the And Got digital could your maybe you that portfolio, Yes. ARMS basically adding that I and over and just then how fits and to the the

Lorenzo Simonelli

that monitoring, we’re really ARMS industries. think Nevada, And it’s that provides and Bently condition Reliability industrial very actually solutions. about around capabilities with manufacturing the vibration. look, asset pleased already Reliability announced. other today And what metals, similar if range broad It’s of Yes, we in you offer sure. within acquisition management a ARMS we ARMS helps mining,

monitoring, you great look into asset to other ARMS the expansion a industries, is within portfolio. our at And to continue so as applying condition have

in then X customers offering into for feel being our laying as ARMS XX I to about So current offering an drive very productivity. able to their over system platform to the as well our good as together integrate it

Operator

Thank you.

Voie line question comes Chris with from the Wells of next Our Fargo.

now Your line is open.

Chris Voie

XX.X% Good color I little segment. bit guess, The of for EBITDA in if we over across the on go that a to margin would normalized expected Thanks. some a course morning. this for obviously, be OFS, the of give thanks Baker’s can OFS is the margin got should color curious just business? now EBITDA have the that where but for aiming improvement over think EBITDA what long-term, you year, you

Brian Worrell

margin Yes, standpoint, And the look, normalized Claudia Chris. margin Look, have with XX% business pleased be there business. not transforming as I said, a from should the EBITDA reason is how Maria and this no team a been business. EBITDA

Maria confident taking, level. sight have team the and to that be actions they it there, line are So get should the Claudia got that they at feel with and of

Chris Voie

year, this that And projects you. after the a you Thank years, obviously, past helpful. revenue robust maybe if That’s one EBIT Okay. prospects together over going X X lot to the here coming few then forward the next to for good coming LNG, back on more, side. ‘XX. of pieces could about probably talk Maybe

into in growth some this services obviously, do progressed visibility the growth you business So and margins, flat expect given as revenues and and after equipment, year your EBIT but ‘XX that? on

Brian Worrell

the a mix from higher standpoint, rate a out solid this a we in I’d point even do headwind a we though growth equipment I’d Look, based of Yes. of year, be as volume an bit couple things. might said on operating income from standpoint. expect say,

on see think, a for intake backlog I ahead first service the order a contractual set, in good about are we LNG the a just levels, quarter a good equipment, TPS bit. pick indicator. about XQ would rebuilding out and talked up Lorenzo is agreement services Based extension we what thing which feel ‘XX slightly booked orders services and large services, other of the The overall point to starting from I order on I is, TPS. mean were

So services. our robust for remains at billion RPO $XX.X about

to orders backlog grow, say XX in or timing So final all service conversion, expect come to I continue could next depending the months. how this over flattish backlog play that ‘XX, orders equipment I’d depending down, on the of how orders year on in in together, be again of revenue put pace the modestly look, conversion and out when I’d

some in but and this growth And income. revenue improve down, show be so margin, operating or flat would in I scenario, slightly would think,

‘XX for sit market I is look, TPS. backdrop mean, good think I here. here standpoint margin indication pretty sitting today. is And a progression nice some I as from I So the backdrop where From pretty solid looks showing think the for I services today, mentioned

Chris Voie

Thank you very Okay. much.

Operator

will now turn Thank I back you. Simonelli Lorenzo concludes This to for call any today’s question-and-answer the further over session. remarks.

Lorenzo Simonelli

Thanks. leave of I’d thought just free in steps with drive the the with firstly, strategy And pleased generated you cost-out And the forward we’re efforts. our continue energy here. cash quarter And thoughts our took to first lead We transition. meaningful strong flow, we closing results. execution to some

the like new technology in areas and strategic continue energy frontiers growth on CCUS, positioning for We’re execute an pillars investing of becoming company to through storage. the our strategy going and to hydrogen of core, for three energy transforming

prioritize strategic and technology on a Thanks we you execute and continue pillars evolution As We call. maintain our look again end cash flow we to you company, speaking returns. Operator, the soon. lot. an energy will discipline our free we to can and the as forward

Operator

Ladies the conference. program. concludes participating you and today’s in This thank gentlemen, for

may great You a have disconnect. day. all Everyone

Baker Hughes (BKR) 21 Apr 212021 Q1 Earnings call transcript