Baker Hughes (BKR) Q2 2023 Earnings Call Transcript

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, ladies, and gentlemen. Welcome to the Baker Hughes Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded.

I’d now like to introduce your host for today’s conference Mr. Jud Bailey, Vice President of Investor Relations. Sir, you may begin.

Jud Bailey

Thank you. Good morning everyone, and welcome to the Baker Hughes second quarter 2023 earnings conference call. Here with me are our Chairman and CEO, Lorenzo Simonelli; and our CFO, Nancy Buese. The earnings release we issued earlier today can be found on our website at bakerhughes.com. We will also be using a presentation with our prepared remarks during this webcast, which can also be found on our website -- investor website.

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

As you know, reconciliations of operating income and other GAAP to non-GAAP measures can be found in our earnings release.

With that I will turn the call over to Lorenzo.

Lorenzo Simonelli

Thank you, Jud. Good morning, everyone, and thanks for joining us. We were pleased with our second quarter results and remain optimistic on the outlook for 2023. As you can see on slide four, we maintained our order momentum in IET and SSPS. We also delivered strong operating results at the higher end of our guidance in both business segments, booked almost $150 million of New Energy orders and generated approximately $620 million of free cash flow.

Turning to slide five, growing economic uncertainty continues to drive commodity price volatility globally. However, despite lower oil prices over the first-half of the year, we maintain a constructive outlook for global upstream spending in 2023. Market softness in North America is expected to be more than offset by strength in international and offshore markets.

As we have said previously, we expect this spending cycle to be more durable and less sensitive to commodity price swings relative to prior cycles. This is due to strong balance sheets across the industry, disciplined capital spending that is based on low asset break evens and a focus on returns versus growth. We are seeing this in North America where, despite the decline in WTI prices, IOCs and large independent E&P companies have yet to deviate from development plans. It is also evident in international and offshore markets, where we continue to see steady activity increases from NOCs and IOCs and production discipline from large producers.