Baker Hughes Company ((BKR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Baker Hughes Company recently held its fourth-quarter earnings call, where it revealed a strong financial performance, with record-breaking figures in revenue, free cash flow, and margin expansion. The sentiment during the call was largely positive, emphasizing significant growth in new energy orders and digital services. However, concerns were raised about potential spending decreases in key markets and economic uncertainties. Despite these challenges, the positive highlights significantly outweighed any negative points.
Record Financial Performance
Baker Hughes announced that it set new quarterly and annual records for revenue, free cash flow, and adjusted earnings per share (EPS), EBITDA, and EBITDA margin. The adjusted EPS saw a substantial increase of 37% from the fourth quarter of 2023 and an impressive 47% for the full year.
Strong Orders and Growth in New Energy
The company experienced robust industrial and energy technology orders, amounting to $3.8 billion in the fourth quarter alone. New energy orders reached $1.3 billion, marking a remarkable 70% growth year-over-year, signifying Baker Hughes’ successful expansion into new energy sectors.
Growth in Gas Technology Services
Baker Hughes’ Gas Technology Services division secured over $1 billion in long-term service agreements for the second consecutive year. Additionally, digital orders witnessed a significant increase of approximately 60%, highlighting the company’s digital transformation efforts.
Free Cash Flow and Dividend Increase
The company generated a record annual free cash flow of $2.3 billion and announced a 10% increase in dividends. This marks the fourth consecutive year of dividend growth, reinforcing Baker Hughes’ commitment to returning value to its shareholders.
Margin Expansion Across Segments
Baker Hughes saw its adjusted EBITDA margins increase by 1.8 percentage points year-on-year to 17.8%. This growth was driven by margin expansion in both Industrial and Energy Technology and Oilfield Services & Equipment segments.
Challenges in North America and International Markets
The company anticipates decreased spending in North America in 2025 and expects flat to down spending in international markets. Specific challenges were noted in regions such as Mexico, Saudi Arabia, and the North Sea.
Potential Economic and Geopolitical Uncertainties
Baker Hughes is preparing to navigate several economic and geopolitical uncertainties in 2025, which might result in uneven global economic growth. The company is strategizing to mitigate these potential challenges effectively.
Forward-Looking Guidance
Lorenzo Simonelli, Chairman & CEO, provided guidance on the company’s future outlook, emphasizing the strong financial performance. Baker Hughes forecasts a total company revenue of $27.75 billion and EBITDA of $4.95 billion for 2025. The company plans to continue focusing on capital return, targeting a 45% to 50% free cash flow conversion rate and anticipates strong order levels in industrial and energy technology, supported by growth in LNG and gas infrastructure projects.
In summary, Baker Hughes has showcased an impressive financial performance in its latest earnings call, with record-breaking figures and significant growth in new energy and digital services. While challenges in spending and economic uncertainties loom, the company’s forward-looking guidance remains optimistic, highlighting its strategic approach to navigating potential obstacles.
