Baker Hughes' Order Activity Up 15% in Q2; Sees Minimal Revenue Growth

- Orders of $6.0 billion for the quarter, up 15% sequentially and up 9% year-over-year on a combined business basis

• The year-over-year growth was driven by strong performance in Oilfield Equipment and Oilfield Services, partially offset with lower Digital Solutions and Turbomachinery & Process Solutions orders. Year-over-year equipment orders were up 7% and service orders were up 10%.

Drilling Services Sees Strong Quarter

In its Q2 conference call, Baker Hughes CEO Lorenzo Simonelli said: "As I mentioned, our drilling services product line had a very strong quarter in North America. In the Permian, our drilling services team reduced a number of average drilling days for a key customer by nearly 20%, setting Delaware base and drilling records for both medium and long lateral sections. We were able to displace a competitor and were awarded a 100% of the drilling work on six rigs based on our superior performance and market leading technology."

Growth in Offshore Activity

Similar to Schlumberger, Baker Hughes has reported a surge in offshore activity which has spurred increased production orders.

CEO Simonelli commented: "We expect on an offshore production orders to ramp in 2019 as more large projects are sanctioned and offshore spend returns to more normalized levels, we expect these orders to start generating revenues in 2020."

Financial Highlights

• GAAP operating income of $78 million for the quarter, increased $119 million sequentially and increased $223 million year-over-year on a combined business basis
• Adjusted operating income (a non-GAAP measure) of $289 million for the quarter, up 27% sequentially and up favorably year-over-year on a combined business basis
• GAAP diluted loss per share of $(0.05) for the quarter which included $0.15 per share of adjusting items. Adjusted diluted earnings per share (a non-GAAP measure) were $0.10. Adjusted diluted earnings per share includes a loss of $(0.03) related to BJ Services.