BKR - Earnings call transcript Q4 2024

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Operator

Good day ladies and gentlemen, and welcome to the Baker Hughes Company Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Chase Mulvehill. Vice President of Investor Relations.

begin. may You

Chase Mulvehill

morning, Quarter Good welcome Baker to Thank Full everyone, Year Fourth and Earnings Hughes you. and Conference Call.

are Nancy Here and me our CEO, and with Lorenzo our CFO, Buese. Chairman Simonelli;

yesterday The earnings website bakerhughes.com. can found on at evening release our be issued we

will presentation our during using prepared found on a can webcast which be be our also remarks We with this investor website.

in not risks involve this conference earnings our and forward-looking to assumptions. statements cause operating non-GAAP are other of provide our a review call, statements. and income actual Reconciliations performance of will during GAAP to release. guarantees we reminder, can SEC future a measures website found and factors As Please for results number of that and materially. These filings differ the could be

to will I turn over call the Lorenzo. that, With

Lorenzo Simonelli

thanks Good you, on X. Chase. Thank everyone, Slide morning, joining Starting us. for and

with are annual and flow midpoint guidance adjusted EPS our EBITDA EBITDA the very fourth setting measures margin. and We and quarterly exceeding eighth and pleased quarter free results, of cash of for quarter revenue, new the our for our strong EBITDA consecutive records and

Our of the earnings and fourth increasing the XX% XX% per quarter growth on share from impressive adjusted an for full trajectory, year. up XXXX remains

Energy by orders $X.X than the the Equipment's of and end Accordingly, infrastructure This the remained guidance drove annual the range. company original year-over-year performance third segments awards. exceeded achieved approximately total high our increased strength free the the strong of important our $X.X this record strong points levels highlights free of billion. year-on-year exceptional quarter of This of cash billion. in more represents we For generated range. technology non-LNG Industrial end adjusted This to $XXX and of record billion. have gas versatility at $X.X for EBITDA to our free near These above milestone energy the in another the flow Tech growth guidance consecutive rate booking year XX%, that flow drove both $X.X FPSOs. our leading target We XX% by record billion cash new diversity performance. totaling industrial clearly of flow fourth in New in energy high Gas XX% a expansion annual doubled during and margin conversion XX.X%. represents the We quarter, results And margins that technologies, of are X.X orders technology across fourth percentage range. XXXX, we resulting led cash The during quarter, of including demonstrate company. million the energy orders midpoint and market a end the significant order XX%

want X. to Turning We and developments. highlight technology recent to Slide awards

large-scale across booking year year GTE XXXX As several I strong orders, gas IoT is was has mentioned, and awards Venture LNG than FPSOs for Global more almost a that span billion orders. secured third of island. LNG LNG. consecutive that for XXXX. from $X modularized $X.X and booked an received bookings This infrastructure, another systems In GTE orders We multiple billion equipment power to fourth we for projects total the bringing to order quarter, provide LNG the

MTPA. trains in System project. Saudi XXXX. from Louisiana award the Arabia to will of with Energy's in Bechtel compression build-out X early following gather Kingdom Master gas Hughes the award Gas pace, This first Baker Woodside for liquefaction capacity The an X of a received we our phase LNG include XX infrastructure Additionally, phase continues of

award During Jafurah we booked the fourth quarter, the gas equipment field. phase for compression for the expansion of an third gas

Technology this and equipment compression have trains compressors electric gas compressors now an total, in we XX field. and the for XX Phase service been fourth and auxiliary in Louisiana. a second Gas gas we of year. consecutive Plaquemines their frame $X for long-term total unconventional billion In X a quarter, secured we field. awarded supply of facility the support agreements Global important Services, signed X In to will this LNG motor-driven treatment strategically service additional motor-driven We long-term agreement of over XX with electric In Venture

a iCenter. awarded to in maintenance GTS XX-year provide Texas. was LNG Additionally, facility a leverage were a next decade Grande also planned Asia in which agreement We will LNG at services Rio support major facility IET's to awarded Pacific, contract

for long-term midstream equipment station In since the service meaningful recorded the quarter strongest one Monsanto to addition XXXX. upgrade upgrades awards, GTS included of companies. key project to booking of Snam, This compression several a

During technology quarter, targeting IET's reduction. flare climate awards the solutions multiple secured

strong sulfide announced flaring the will gas downstream integrated removal oil and electric-driven COPXX processing system the Middle reduce gas Oilfield continue CTS refinery. experience recovery in flexible gas SOCAR centrifical CTS compressors, one at largest of hydrogen differentiated order Services our for and significantly to Brazil, at in an globally. pipe we will momentum Separately, Heydar flare the particularly provide to recovery As & supply Equipment, technology. projects Aliyev In with East,

we solutions, unlock auto drilling its from steerable year to ENI a be execution orders will flexible asset fields. pipe track exact Petrobras the multiyear to in follows third This lower takes received ENI across reserves of help a for quarter award risk delivered the Santos be will $X.X Basin mature billion, Europe's this for bypass business. received we contract provide and significant our of total system miles which Baker award developments. rotary for XX record X quarter, from the largest to In and one deployed Hughes flexible for XX During year flexibles miles a for costs. of to

tubing in awards multiple solid as across completion see region order coiled Middle fluids. momentum to for services the as East, and continue receiving drilling well the We

ADNOC from AIQ, and with We project. AI per Abu critical services also other in latest launch electric insights in footprint enhances success CORVA markets pump on parameters. recommendations advanced drilling booked submersible motors key and efficiency Driving This the operator magnet to by major providing AI critical permanent for innovation Penetration the innovation, Dhabi, an lift of an which efficiency. and to manufacturing artificial award Optimization Iraq, provide the and signed includes utilizes a improved we bit, digital long-term In agreement for our of minute in time technology expanding growth are company. weight our optimizing real which to rotations Rate

the footprint During in our expanded and we quarter, Oman. Namibia

key opening ensuring demand a We also the Dhabi, recently control region. in close to major headquarters customers Abu grand had we of relocated service our that to are in

the Turning slide. to next

will Baker demand and for the with tailwinds decade, solutions. enter we to our believe in Hughes As is half we a continue of drive well technology back the of to positive that thrive XXXX, positioned very number

economies On macro the struggled the higher interest has face economy rate the front, the U.S. remained growth. while and in Chinese environment, European stimulate to have resilient of

Looking new by XX% in will day will Wood data drive consumption. natural economy Against products uneven will backdrop, led economic have is in IET. Boosted the a U.S. and by solutions demand year in XXXX, by According both Mackenzie, could we at gas which per and of we another encouraging facilities be LNG to result navigating our centers. which development, increasingly number growth. gas or OFSE gas this approximately XXXX, for increase believe for natural for and that and uncertainties, a increase accelerated of global demonstrate gas-levered set by to increasing global requirements economic this growth Bcf seen geopolitical economic power for demand continued and XX demand trends positive LNG

MTPA our forecast we than would LNG, between MTPA project we of of long-standing increase XXXX capacity year, global For XX MTPA XX more a of level in still to 'XX by XXXX. XXX Last MTPA that of expect FIDs FIDs XXXX. Accordingly, and and anticipate were FIDs. XXXX, there XXX

contracting year, exceeded by which the XX outlook totaled of year XXXX. record offtake MTPAs FID set a last prior and XX Our record strong in of is supported MTPA

follows remain also storage infrastructure for booked in very XXXX X demand We Hassi Gas Algeria Saudi we Margham in in when This and Jafurah Dubai. Arabia, to the MGS expect facility and strong a gas robust R'Mel projects.

projects not expansion the projects America Africa, of in several America. we the East, across same active see Middle on pipeline and level XXXX, we While may conversations are large-scale Latin in North

efficiency goals. achieving role Turning to We and our technologies energy an see zero in energy increasing decarbonization new net outlook. playing

Looking forward, of new billion to $X.X targeting XXXX. energy in $X.X orders billion we are

in of $X target policy several While technology across near-term we orders clean to billion. uncertainty States, United remain XXXX exist $X the areas some billion achieving our in confident

and pipeline our solution, secure, opportunities, sustainable new direct project help both continues Power in are affordable, capture grow. potential development and Our provides that the we Further, of a domestically to air about very technologies the lower and development NET enable energy energy like plan more under will missive These Mosaic. technologies future. internationally of excited

volatility that factors several are prices. There markets. oil could in further oil to drive Turning

activity increasing growth countries likely tariffs, the still dampen which slightly production in consolidated and anticipate dependent which major XXXX. we an America, oil-consuming production imbalances and their cuts given price In as where persistent significant in demand and look in remain has acreage. focused in of be In element on range down volumes. decrease be weigh spending the of we offshore supply On to trends magnitude many line operators expect we pace upstream path oil Ultimately, economy. America, the see reversed the operators, OPEC+ would will the side, E&P on by structural The like slightly global key are potential the North adding to in optimize uncertainty U.S. discipline spending mid-single-digit highly China, capital for this to in newly backdrop year-on-year North on outlook with growth changing to XXXX.

to shifting down in North projects in in trees anticipated an and subsea led for and we growth market, the FPSOs. are some to the be of international Given focus ore offshore, of to activity expect reach a and America, enough several we levels The years, levels. to of outside in all and oversupplied next Arabia bright are will from we Africa, international of spots Saudi In as development outlook prospect expect weighted gas be for stream projects spending see outperform customers of drive activity FID. several mix in This In East XXXX, to continue up markets. somewhat subsea materially, to Arabia ultimately but offset to the XXXX flat by reduced orders expect In Sub-Saharan be key not for we SSPS our key production a Mexico Middle the strong portfolio uncertainty market. order tree to year-on-year. translating flow Brazil, steady Saudi by leading to consistent markets,

in Turning to of industrial a cycle continue life discussion business Slide X. businesses. We with technology, gas consistent key IET the want around segment value-creating high-quality is that our to attribute our

more drive our orders equipment serviceable increase Over of the billion base $XX will past X in that years, XX% we than by installed have booked a XXXX.

to beyond AI meet outpace We the increasing this due to gas environment revenue pricing. Services rapid to the and data installations see provides market. demand upgrades with Tech strong this decade. mix, this installed of growth digital a per already out Gas XXX inflation, material enhancements. double pace end suggest the of major turbine The driver base When Market supply expect forecasts We center could expansion gigawatt chain will of for to tight cost growth around be pricing, across turbine the required year the capacity an of generative workloads. combined and tailwind gas

have overall increase installed through and the our is outpacing by stored the growth expect attachment units important across also We rates rate. serviceable aftermarket projects LNG shift This all mix over highest towards XXXX, to base our as services. LNG of XX% these XX%

is the our opportunity focused as of as and maximizing energy customers benefit equipment through In to provide equipment base performance upgrades through growing on uptime enhancement years, the recent crisis. market managed installed Another large ages.

into move over we a a acceptance years. we and gained fuel coming expect more upgrades demonstrate energy gas the strong as However, destination fever to stable environment as growth

can of lower that range lower increased drive produce emissions, upgrade have consumption, and energy a power We yield. technology output higher throughput solutions

has technologies innovation orders our the about and potential of In of pipeline. at millions upgrade addition, are dollars believe to market, aging we of enhance of generate R&D investment a margins excited hundreds technologies We that by upgrade result are we the that equipment XXXX. new new direct accretive introducing into

development In we upgrades, of solutions. the through addition are performance plant to our advanced enhancing customers' and service equipment emissions abatement

cost to and capabilities are our AI in iCenter of XX/X that solutions the our monitoring leveraging and customers than latest platform optimize data, XX Cordant generative help ownership. of total We monitoring years our digital capabilities diagnostic create equipment their more

and digital of orders over the end On offerings, digital XX% product units this by XXXX. connected back increasing increased customer enhanced of year approximately at acceptance the X,XXX with

Tech high-margin strong the increasing digital discrete can Gas will next accelerators confidence trajectory and gives that we base, beyond. growth to Alongside this GTS our and have an for grow XXXX and expect installed business by revenue Looking GTS we benefit forward, double orders us thereafter. continue tangible Services. decade we In X structurally growth the that summary,

over in like headwinds Before the with to capacity, our I MSC emphasize to faced again results. We turning the XXXX of near-term call reduction sustainable Nancy, market the would United maximum strength our yet some for we the and the States, Saudi exceeded EBITDA end moratorium the and midpoint in of compared our Arabia orders to original ranges. guidance the LNG high still

Our company evidenced by is results. clearly another year. delivering record

our target. segment continued portfolio drive momentum beyond opportunities with year on embark as we further another growth the demonstrate of margins of excited well this technology continue the to XX% we in to and about We XXXX. our as EBITDA to expect as our expand strong beat And versatility journey are

will over With that, the Nancy. turn to I call

Nancy Buese

Thanks, overview results and outlook. of our strong then summarizing segment full with and Slide consolidated year another Lorenzo. our I demonstrated speak will details an during first XXXX. X year to begin of progress before We on quarter

year, of differentiation over the strong EBITDA of We marks levels XX% second the the full setting highest margins EPS billion, by consecutive for for year. order RPO. Adjusted $XX.X for portfolio XX% continued adjusted and Technology to year a totaled orders and $X.XX. marking diluted of increasing billion, billion the the points XX.X%, increased expansion total the near-record for IET's IET including X.X Adjusted segment. to the percentage For $X.X versatility of that generated $XX second fourth of total support a increased company. order book EBITDA to record and consecutive margin orders year

from our totaled represented targeted by conversion cash which year. for declining flow $X.XX cash of In our EPS the to a high addition billion, benefited near to tax percentage effective range. our flow X rate points XX%, the of strong approximately EPS operating to results, XX%, $X.X adding free Free end

quarter results. Turning to fourth our

As Lorenzo EBITDA billion Adjusted increased orders across growth billion, strong company strong mentioned, driven by $X.XX performance XX% orders $X.X of to including IET for and total we both quarter with revenue IET. exceptional delivered $X.X margin billion, continued a segments. by very from year-on-year

on our per delivering $XXX commitments, We income remain our meeting income we $X.XX GAAP diluted earnings are share targets. and was were GAAP on margin Adjusted million. operating operating $X.XX. was focused billion.

the by of quarter, share of certain OFSE to to our XX% share for our year. per to investments generated earnings per growth valuation collections. a an adjusted our into forecasted flow the profit a We years $XXX and restructuring strong items, of activity benefit future. million $X.XX, profitability allowance diluted increase charges. the of unrealized streamlining of supported release offset recent allowances tax levels. charges last assets, from reflects related free for alongside adjusting the Excluding continued workforce for and pattern of other of The our by net over primarily relate equity growing operating was earnings cash compared were Excluded Restructuring rightsizing certain model confidence release when to match quarter same deferred valuation quarter partially $X.XX on gains and

XX. Turning to capital allocation Slide on

XX% flow. fourth repurchases, strong, $X.X balance approximately We debt-to-EBITDA billion, share of we quarter ratio dividends flow and XX% to $X.X of of billion of liquidity to free net committed remains cash Our sheet of to X.Xx ending XX% with cash amounting returned and the billion. cash In returning have in shareholders. to XXXX, $X.X remain free

capital. want next growing on improving to strong growth to dividend, Turning return highlight our the slide, steadily earnings and I invested

increasing demonstrated have rate past share compound over annual by robust XX% this growth growth per years, a period. earnings the over We in X

This dividend. by our industrial a fourth our marks announced quality the and that flow, our raised with free year increasing consecutive since momentum confidence XXXX. peers. demonstrates XX% dividend, and durability we've increase growth the yesterday. quarter of to of earnings XX% share third dividend Moving a the the This We our cash we consistent company's in

positioned buy uniquely we're shares to the opportunities and retain believe dividend that continue enhance I the will capabilities. increasing pursue our flexibility forward, Looking financial to growth back consistently

profile, our solid X growth the demonstrating by enhancing the achieved significant progress and returns years. margin capital-efficient expansion last are company's driven over in We

ROIC For make XX% target, to XX% X for ROIC year XX% of exceeded OFSE, steady increasing XXXX, to our continues target XX% progress towards IET In our early. XXXX.

our returns and increase both to remains growth. as on profitable We expect cement beyond further focus XXXX capital in efficient,

Now I will starting highlight XX. Technology Industrial on the results with for both & segments, Energy Slide

infrastructure billion, driven and awards the further momentum. primarily During gas order booked quarter, $X.X of IET LNG strong orders we by

full the with year, X.Xx, year-end. near-record in at billion of secured RPO ] of For a $XX IET resulting [ of million levels book-to-bill $XX.X orders

XX% strong significant to and quarter a up of Our revenue for Technology Gas results reflect expansion. services fourth in increase and strong EBITDA, growth due equipment another in quarter IET year-over-year margin both

for and driven approached and a a second the record Solutions peak the as reached year, consecutive backlog. Industrial margin margin latter in revenue conversion both significant mostly price Tech For levels. year prior with benefiting higher enhancements by IET $X.X Gas billion, setting full Equipment, EBITDA high was of improvements operational This the from new reclaim and

XX% of on orders performance, Full to Oilfield expanded to $XXX outperform during segment's and $X.X margin and resulted XX. SSPS full $X.X solid X.X booked drove margin to driven year EBITDA by Services approximately quarter in revenue Turning million supporting XX.X%. fourth Slide points of Equipment billion. the the We increased $XXX strong quarter, continues to billion, percentage million. that orders by & EBITDA EBITDA OFSE orders which year flexibles of

we significant provide making Slide margin structural in XX. to the I to improvement. additional driving want Turning are highlights on progress

teams the and pace We lower. is projects and and structurally drive of clarity, streamline management decision-making, modernize remove several smarter work to duplication activities, are our enable transparency to costs improving executing This systems.

to across our supply enterprise. the continue chain enhance We

over when from XX% savings cost Typically, we year-on-year move country countries. XXXX. see value Our spend to best we increased in XX% regions higher-cost best value volumes

Going the alone, strategies this forward, employees projects of team we larger seeing we're being lean across from functions. volume has XXX In these materials adopted large X,XXX of benefits year kaizen operations. focused our problem-solving on IET, a The sourcing over are initiated countries. involving over across all

margins Tech, on Our on This has GTE on in customers' existing helped Industrial XX been effective a demand. growing refocusing the doubling by years multiple to new has volumes manufacturing with enabled the of to to execution. execution is our in and Orbit develop the driven over and our increased great This SSPS. has footprint within line, of focusing processes due model, EBITDA Through margins XX% than the more layout a the last into the improved by year. times our been team mid-teens its capacity. flagship X efficiency. a kaizens, product, to Cordant's reducing improve GTE applying we XX% of our assembly us In improving have times support kaizens OFSE, increase team throughput performance to Lean improving model, to have share SSPS and adoption capacity our rightsizing lead than markets gain In made has driven have key needs. more levered deliver commercial lead significantly last speed doubling we example progress manufacturing lean

optimizing the consistency with to streamlined margin focus we intensity target. now enhancing drivers significant lines. The drive are and structure will on of along to operational commercial was XXXX, structure. our key duplication transform These the continue activities and activity matching OFSE this, service OFSE anticipated a the our excellence operational to overall actions, be operating are efficiency. leading implementation the line These with is business. to model business across across our centralizing regions achieve the In and the For In levels. centered our we new in segment, to reduction business product and operations, focus

transformation yet We margins. on to have enhance are making our significant productivity progress additional opportunities efficiency, journey, ultimately, and

clear, is and strategy in action further are taking Our we XXXX.

on We margins. our targets and culture journey on we best-in-class have see continued milestones XX% cultivated focused towards improvement, an as organizational margin margin

will for quarter update EBITDA revenue, I of approximately expect focus Slide the like EBITDA company The Starting guidance. Next, shown on and first are year the $X.XX on found billion. $XX.XX this ranges to slide, we of midpoint with The full full and outlook. our would XX. year, revenue be of billion can guidance on I of D&A total you and and our XXXX details on

targeting also free our cash conversion We XX% EBITDA. relative are XX% to flow of annual to

tax our in rate range We XX%, the strategic XXXX. tax optimize with plan a place in to expect XX% an of to effective rate further beyond

momentum robust We market, expect order to IET the remain while levels production infrastructure strength gas LNG orders with returning continues. at to this energy and year

the backlog of This expect third orders $XX.X At years, to this provide billion. growth business businesses. Given mark will year high-margin our strong not aftermarket IET decades, would billion service of the XXXX, but the for billion midpoint, least of provides our consecutive IET environment, of orders. only strong at if we not $XX $XX.X for equipment into support

orders and the As X last billion. a billion [ full continued strong over of of result year this $XX.XX momentum ] performance and we revenue EBITDA IET of expect years, $X.X

slightly OFSE, market forecast and result softening of North service revenue SSPS America oilfield billion, $XX as a we down revenues. year For of in full lower year-on-year

increase still expect EBITDA billion. we to $X Importantly, to

maturing We have resilient proactively to spending OFSE portfolio positioning a in upstream our cycle. been remain

first Now guidance. turning to quarter

EBITDA $X.X total billion. expect of approximately $X.XX revenues We billion of and

and this will demonstrate technology, in in execution year-over-year $XXX million. be GTE, expect strong conversion GTE. results gas exchange. to and impact any chain The foreign tightness of supply CTS operational material technology driving backlog the we first and we Overall, by industrial EBITDA aeroderivative major in EBITDA the changes led expect pace growth factors IET, quarter of For IET range of

The range include we OFSE, in international In extremely with Hemisphere. EBITDA the Saudi For performance pronounced operational a Factors decline activity winter driving in in Mexico and quarter conversion, margin. and SSPS is portfolio the record are and our second organization pleased to seasonal These indicators margins expect to solutions. consecutive improving more that is the OFS the backlog levels the first value. shareholder quarter drivers our $XXX we marks reflect of record are EBITDA quarter Accordingly, for during of journey Arabia we and consecutive of summary, million. XXXX. Northern SSPS. our opportunities entire EBITDA company to increase the are expect results weather key working. of further catalyzing structurally and market transformation The quarter the with on differentiated third committed fourth clear of Both

of excited and the Hughes. proud the of we is are company progress are about making, the We future Baker

I'll call turn the back to Lorenzo.

Lorenzo Simonelli

you, Nancy. Thank

you profitable As of results XXXX over X exceptional into will on have guidance, our we improvement have energy from past more more Slide increased XXXX than industrial technology a see can and and points margin much strong margin the evolved illustrated XX, company. percentage X EBITDA midpoint Hughes' our At Baker years. by the the

has more same EBITDA doubled over this Additionally, period. than

and XXXX beyond. at Looking

Our balance strong. remains sheet

we to differentiated for our this and see fundamental Our and energy Baker Markets Hughes. gas emissions the strategy more this with energy the is is vision are objective. with be of ecosystem. fewer of use achieving technology aligns clear, for evolving, increased growth will natural need and The opportunity a critical

across mature positioning and power solutions provides This gas, distributed LNG growth be by new opportunities our emerging will new accompanied vectors market and strong multiple and Our infrastructure, for fields energy portfolio. natural markets. industrial gas across

a of pace the of the portfolio energy have decade, technology broad will remainder the transition. We growth irrespective through of that the drive unique

flow Hughes cycles. across Given cost service generate more will significant opportunities, our untapped revenue less recurring Baker cyclical structure, and in the market balanced free nature becoming cash efficient portfolio more and earnings durable is and IET

results. like delivering conclude, to for Hughes thank Baker the outstanding yet I'd again To team

we Baker remain forward, committed to our our and As employees. customers, propel to we journey Hughes shareholders continue

I'll over call turn Chase. that, With back to the

Chase Mulvehill

can up Operator, questions. open we for

Operator

the [Operator Jayaram line Instructions] JPMorgan of Arun comes first Our Securities. question from with

Arun Jayaram

IET bit Lorenzo, XXXX outlook. on I little wanted to your dig deeper a order

some at as takes orders now? well LNG, of reached been of for billion $XX.X you you picture Tech puts discuss You between macro do the and orders OOP, for the you gas midpoint. guided years $X the And Gas infrastructure? for orders that as overall that threshold several at billion can think to running you've the inbound Can of subsegments, some

Lorenzo Simonelli

orders in And with exceeding we past few a XXXX, U.S. had you is the we've of booked that bookings, highest was in LNG clearly, company's had years, XXXX, booked do this strength we're LNG versus we past. And at which permitting yes, gas couple look increasing to orders over MTPA when come see X we to And XXXX. year history. that's LNG it's past infrastructure, in continued years. I And orders gas decline before our of continuing look the back. LNG obviously, think demand the continued XXXX. important a $XX we're And years. XX% we in going And as the we going at order that, moratorium. history pipelines, strong XXXX, in see And the obviously, the think X.X, to processing IET XXXX. be gas second we've And to Thanks. when next billion over FID-ed got recognize amount booked going we've actually even of about XX billion, a the I And $XX over in have

look data in pipeline, growth X the XXXX and again, interest possibly to of versus side, year. power. gas. solutions $X.X And clean CTS strong CTOS the and year increasingly, meter robust You opportunity we and then orders new to that continue at NovaLT. billion the orders XXXX we led this management And last also and for And $X.X turbines our on as We're with see of per supports demand see order energy look emissions the increased for also centers both NovaLT by at billion with behind strength, year. doubling to we FPSOs, X continued an FPSOs seeing oil in

look you continued across overall and and we industrial strength the recover, strength the also see at IET As continues tech market in the market to environment.

billion. It midpoint billion the where the year consecutive ahead of And billion is $XX.X of in of $X reach. the good third the feel being So on about mark side, GTE again, would orders. $XX well the

look $XXX outside XXXX, with billion of an of we of XX% we've out market that being to addressable as So got LNG.

good feel year. strong industrial in another again, XXXX, technology we the So about the for order trend looking long-term energy book within,

Arun Jayaram

Great. A follow-up.

I gas, more in to if about outside around double turbine what in you are oil could commentary Lorenzo, of and was power, interesting than your thinking LNG and inroads for highlight cetera. XXXX. making But largely wondering an and deck unmatched. et as applications the gas you had turbine settings oil your market, type well the in strengths industrial as gas market gas market the You of in anticipating turbines by

Lorenzo Simonelli

a and we've Yes, of portfolio multiple which again, technology Arun, drivers, be applications. used full Turbine got can in Gas multifuel

also data providing As marketplace and and the solutions. And at turbine see XXX you an our gas got space distributed the off-grid portfolio behind of that to you meter an our opportunity power industrial we're aspect we below have. solutions that look the at NovaLTs this we've and megawatts, is and enhance center, into to continuing the going the and opportunity the lineup look we as increasing continue

as be gas grow, power place. that as at to of look aspect center continue in look and as see the data also able So the well need the But market processing in to to also, particular, at you of we opportunities the we propel as compression forward you continuing aspect molecule. going to pipelines,

board, the So good opportunities. across

Operator

Anderson line next going to with is question of Our come the Barclays. David from

John Anderson

businesses, we question specifically a going business is bit just the mature chemicals the But spending would So various with you and alongside down business including side, ask the a out grow to focus playing want 'XX. we is cycle see on I components in Overall, be lot flexibles. later I fully IET a today -- year. about the so. your the IET to production you're asset to the this you solutions, how expect of seeing OFSE mentioned question around the

year be line by this -- guide X%. OFSE top is you to midpoint down on the However, down for

of maybe in OFSE the of mix guide takes for and is how out the and really around puts year. that kind it business plays during what question be year the could some on the and of the So

Lorenzo Simonelli

about from sure. away which is we're an progressed and And definitely the Yes, part all with time. pleased by the take of way and very OFSE to OFSE the want our has don't talking important IET margin business, in

think do as at lower XXXX we definitely, to prepared look when I you So XXXX. see remarks, compared our slightly

to proved conservative a us historically, year. well last we've more know I has think which you taken approach

at in consolidated number to they're decrease this to As A operators America, mid-single-digit newly place. focused that the you year we discipline looking look optimize to year-on-year in capital they've of be anticipate North on range. acreage continue do the spending got and

is this because market we production greater in XX% side. production than is have our related outperform area to of expect what portfolio just weighted We the to the

the focus of to On overhang reduced the international to leading of year-on-year. also regimes markets, and oil some flat again, potential the There's seeing we're some capacity OPEC+ a on the changing the activity. spec gas, down

offshore continuing the this expect to see feel assets. side, as by positive. decade and we mature and on offset mentioned, the and an from do it, that soft the solutions again, and our production to the expected we still we to the sub-Sahara Looking about And at year-on-year. latter and do Arabia international we go outside we and look And as . we on Middle partially be XXXX, year. continuing maximize brownfields Africa. of remain East the increase Brazil the to of past Mexico, opportunity from Saudi good But perspective, as some Saudi existing part down at to focus North this in asset Sea and again, flat

Operator

to the Our come Bank next of with from is of Saurabh Pant going America. line question

Saurabh Pant

in aspect business. right? how Services discussed, slide, is And life think discussed Gas touch the installed then Lorenzo, know you If obviously And your be the revenue I want is most Tech your to if I I next Tech like digital. accelerators, think I X X on Lorenzo, would about capacity deck, we Slide to think growth? X which outpacing mix the the Gas should to which growth these we Lorenzo, Gas go you meaningful years, the cycle for talked X Services X upgrades, of X growth, about really pricing just you of impressive, back Tech

Lorenzo Simonelli

growth to And this Yes, we our that on is grow for an the look over our by going driver. XX% base as mentioned drivers by service GTS you at aspect. the is growth mix we've XX% we rate. XX% And installed mix and overall to that installed LNG the at And to increase improving And definitely. you of And It's revenue on be again, least increase the rate. now back LNG, to going outpacing continue outpace base see page. XXXX, standpoint, a shared again, the as revenue through is to biggest we highlighted, expected the for XXXX. in it's between as which expect really it's from

So upgrades equipment. that is other the digital. more the Also, side, aspects, over revenue of on it the LNG generates life mix beneficial, service definitely in as pricing, high it has the rates attachment and

we is forward, an see is something we is well. We important. factor as for continue one mix the those that upgrades to think is be as going And go increasing. to that also But having poised important

we As an year-over-year. the of since we the in you order fourth the XXXX. had uptick saw XX% And XXXX, saw intake of highest quarter, in second half

favorable looking well. there as So

Operator

Stephen question next line comes with Our from the Gengaro of Stifel.

Stephen Gengaro

I over there. guess,

have to the years. year margin curious very moving walk OFS I get the the the So successful obviously few been XX% could was side on this you target you on and IET front us pieces if for guys last for the XXXX. through to

Nancy Buese

Sure. that one. I'll take

with about in demonstrate XXXX as gen really necessarily particular, and XXXX, And levels. in even pleased are have business improvement of think progress our would absolutely broader and And OFSE be major driving driving initiatives made the continue just we transformation. initiatives, a in we driver will say transformation I We activity self-help as to we're not teams the the significant that related to in beyond.

the there's saw, in So XXXX, growth. as margin to and outpacing years. that that's And well, you was points, really margins we revenue expansion over what that's that drive OFSE and increased coming X.X going And XXX%. the generated by in margin all percentage incremental piece

there. So a of lot work good

and that the been driving evidence upstream good in maturing really portfolio resilient as think to proactively be we truly I on to focused a and positioning see remain OFSE continue expected activity in to also, now levels. match that We're consistency, structure streamlined to that of that, we across XXXX. structure our sort excellence on in rightsizing addition worked service operational operating what we've spending we delivery cycle,

think portfolio resiliency in mentioned, high highly Lorenzo bit our play technology, the So about in provides of weighted portfolio range. we're when and at work, a we production the plus as of softer And as this commoditized a the not environment. much really you quite end

highly see optimizing So ourselves about at more when from revenue they're production our think accretive their customers we OpEx margins. assets, existing for

components. are team on upstream So rightsizing all confident all of on the business we even to say very fantastic OFSE in the highly been the softer the side operational environment. that work that doing have spending achieving and margin our focusing in excellence XX% And

will So our to fuel beyond continue XXXX all enhancements even structural margin of the closing OFSE. that expansion these as focus peers with in on we gap

of And gaining then solid turning and to IET, been the a margin expansion momentum. really lot has there

So in X almost we percentage XXXX, points expansion. margin of demonstrated

the that to XX% continue and will XX% towards margin see guidance XX% expansion goal, working We segment in towards implies XXXX in XXXX.

And so we'll progress. continue to

on of of drivers GTE. track a just are and couple that We is in

significant We that And expect coupled our priced to higher we've previously said with continue volume gains. further previous. leverage, is backlog productivity than

to that offerings continue and new continue as and expansion enhanced also all we better GTE normalization and So got chain. support on aeroderivative well. see margins we've the that solutions, we will upgrades margin help that and supply digital will to of as mentioned, will way, services GTS, Lorenzo focus in and In

starting more as tech, but and going that's decline, that's improving factories we've past, cost are better volume to And talked finally, Another the then about margins margin to really in there, absorption. evident drive CTS, and we uplift. costs is R&D getting help in component, the most through industrial in

There's all continue excited. margins. destination. very for ability we that XX% XX% is mention of a of confident in not our XXXX So in opportunities we're to margins And expansion, to to the better and to contributing remain and get lots final that's

improved the even and eyes We both goals. past to our will lift past XX% segments continue in XXXX, margins past XXXX

Lorenzo Simonelli

XXXX and think that add, you self-help been by to side, on working side, X/X. of the execution we've self-help half would the I as on considerable the Steve, processes about is progress at that's and said is we're it this also lot look amount, the simplification IET a made on internally. the And and of I and the OFSE the on driven just down and And

mentioned, company. the focused again, the process Nancy the is continued So It's point. path not on And as the a and journey. an XX% on positions end enhancements within just

Operator

Our Goldman come question next from & of going Neil the is Sachs Co. Mehta to with line

Neil Mehta

versus right I buybacks XX% about talked the the dividend to capital Nancy, on see question and you just about great shareholders to to the into that around leaning back A to way today. definitely bump return returns, dividends think, your here dividend. perspective you And the XX% as think Lorenzo, the

relates but Hughes. just a opportunity allocation, on you was latest the activity quieter do also So then And M&A. think And no for it looks touch as Baker like you there. what M&A capital It your maybe transformational could set for thoughts bolt-ons? for to M&A year

Nancy Buese

cash profitability of of buybacks. to questions. that we committed dividends really over anchored we billion cash the flow and completely in goal XXXX, our and returned Great shareholders, increased were XXXX, will we've XX% to the $XX the to dividend remain show flow to with be we Yes. And of the free was dividend, growing commitment free stated to company. of formed by performance the And pleased returning company our XX% and in our since

of maintain total to remain repurchases we terms So also And that opportunistic what in is which we share we will commitment, XXXX. will continue exactly did to in that. fulfill

row, years dividend XXXX, So we raised X our a shareholder And remains the on dividend in same buyback. with and the do continue track in to record will return and the in we share increased strong. past focus the as

want to got have credit -- business. that And be for very we and M&A be do is then ratings ability always what's to right strong need and some it So on position, philosophy towards strong some want we our do as the all flexibility of to the retain to of XX%. shareholders. flexibility. in We've question, then financial for that commitment a sheet, the our to we XX% balance will work And the

company portfolio what to and of at be grow. our continues that about we optimize think how the as we look composition should to continue the So

So that complement we will and energy will tuck-in tech in leadership. always really M&A new some the bets and our small technology existing focus on anything space

for -- XX at now existing to X think XXXX, will we and the fits where base. strategic a horizon X we need asset portfolio and always about between our gap we places in with as and look opportunities So fill

always So open our in in XXXX have we're acquired But for eyes beyond. was and will always we on it the lookout. yes, opportunities XXXX, and

Operator

with question Scott of Gruber come the is next Our from Citigroup. line going to

Scott Gruber

Yes.

Nancy. for one Another

tech just the better. I maintained XX% capital and convert XX% to improve more year. R&D color you cash the for perspective offsets a in rate, great. over of and the on rate update conversion you've know from you've are You've to getting discussed tax had 'XX? that on keeps So puts be conversion would free kind the Can on new work margins and rate? the the moderating takes there target cash Your lid us initiatives a time. Are

Nancy Buese

major Yes, for sure. pleased pleased performance. area really XX%. We're XXXX, target and very a free we're with been entire rate in of the with that conversion our That's cash company

very so overall about So spent it's we We're our inventory do time Hughes. more working A in efficient. and achieving think our cash performance the some to drivers processes, a much that's can again make profitable, right lot big of free of We've up for about more every that, this is really thinking lot people our XX% to in high work XX%. see about We the around XXXX. range collections the efficiency. our how process, I tighten really is And thinking that that just more of in we can confident day-to-day. when Baker a tight, flow priority turns, of area aspect capital the still for range inside

year, and to been organization over So fun to much has watch past XXXX. work in do have the really this we the

space. that in confident highly So

other The management. tax piece is

So lower well. tax cash will in meaningfully working our drive around rate in And our we've given tax we're rate made we in book that, XXXX, really and and guidance and improvements come some down our to as rate. good rate XXXX,

capital driver everything in effort working of then free flow. cash and around structurally margins. our lots So And higher is really another

improvement margin flow continue to going free going cash that to move. see you're overall to and so And is flow through

working efficiency path through we our forward achieve free about very So going conversion we're to cash of flow about really side. and XX% as confident capital -- think consistently tax the

sure. efforts made and in in great of XXXX, lots there's to progress more XXXX So for come

Operator

the question next line of Kurt Benchmark. Hallead from comes with Our

Kurt Hallead

like picture, kind increased looks about for growth You've you big very beyond extends story IET the that, for your compelling and when right? but question out dynamics, you, not it talk outlined obviously it through XXXX, start base Lorenzo, a to installed only services. of aftermarket

could as Services, the to moderating not your given you here rates whether around number more, half, Oilfield it, business hard growth without or wind about feeling putting if of a a in being business So you happen IET the mix at have get closer not up XXXX? least to

Lorenzo Simonelli

the mix got move from from critically in And business continue the a stated, together the spaces. important strategy is Baker is of capabilities Good considerable, the are look, we share continue in customers units grow you. our new actually Hughes both have addressable of to of the will destination mind, market change. as and totality. the percentage grow to to time, into and Again, market to any we will opportunity a and lot IET we've together. don't also X over as to And and And hear standpoint the segments

standpoint, be we're why of see the grow portion element mix, Great. opportunity we in point unique that's percentage way the IET we to Baker as larger which a and in the is so of yes, the from Hughes. overall of portfolio And you'll think to like structured continue a a

time. coming I think we're to

Operator

back last to conference would hand our Chairman over remarks. his to Executive concluding Chief the Lorenzo for Simonelli, I question, was Officer, and like That and

Lorenzo Simonelli

to look thanks the you earnings with taking us call, much, and out the all call. may I and today's very time on close again you speaking to joining Operator, everybody forward you and for Thank soon.

Operator

great and you Everyone, Ladies disconnect. now thank in day. gentlemen, the does may today's and conclude you program, participating a conference. for This have

Baker Hughes (BKR) 31 Jan 252024 Q4 Earnings call transcript