Q3 2023 Baker Hughes Co Earnings Call
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Good day, ladies and gentlemen, and welcome to the Baker Hughes Company third quarter 2023 earnings call. At this time all participants are in a listen only mode. Later, we conduct a question and answer session and instructions will follow at that time.
Speaker 1: transcript
Speaker 1: Good day ladies and gentlemen and welcome to the Baker Hughes Company 3rd quarter 2023 earnings call. At this time our participants are in a listen only mode. Later we conducted a question and an introduction instructions will follow at that time. As a reminder, the conference call is being recorded. I would like to introduce your host for today's conference. Mr. Chase Mullville, Vice President of the Investor Relations, 3rd you may begin.
As a reminder, the conference call is being recorded I would like to introduce your host for today's conference. Mr. Chase Mulvehill, Vice President Investor Relations, Sir you may begin.
Speaker 2: transcript
Speaker 2: Thank you, Justin. Good morning, everyone, and welcome to Baker Hughes' third quarter 2023 Ernie's conference call. Here with me are Chairman and CEO Lorenzo Seminelli and our CFO Nancy Beasy. There are any to release we issued yesterday evening can be found on our website at BakerHus.com. We will also be using presentation with our prepared remarks during this webcast, which can also be found on our website.
Thank you Justin good morning, everyone and welcome to Baker Hughes third quarter 2023 earnings Conference call.
Here with me are our chairman and CEO, Lorenzo Simonelli, and our CFO Nancy BZ. The earnings release, we issued yesterday evening can be found on our website at Baker Hughes Dot com we.
We will also be using presentation with our prepared remarks. During this webcast, which can also be found on our website.
Speaker 2: transcript
Speaker 2: 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.
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.
Please review, our SEC filings and website for a discussion of the factors that could cause actual results to differ materially Reg.
Speaker 2: transcript
Speaker 2: Please review our SEC filings and website for a discussion of the factors that could cause actual results to differ materially.
Speaker 2: transcript
Speaker 2: Reconciliation of operating income and other gap to non- GAAP measures can be found in our earnings release. With that, I'll turn the call over to Lorenzo.
A reconciliation of operating income and other GAAP to non-GAAP measures can be found in our earnings release.
With that I'll turn the call over to Lorenzo.
Thank you Jay good morning, everyone and thanks for joining US we were pleased with our third quarter results and remain optimistic on the outlook.
Speaker 3: transcript
Speaker 3: Thank you, Chase. Good morning, everyone, and thanks for joining us. We were pleased with our third quarter results and remain optimistic on the outcome.
Speaker 3: transcript
Speaker 3: As you can see on slide four, we maintain strong orders performance in both IET and FSPS, with large awards coming from venture global in LNG, and via energy in SUBSI. We also delivered strong operating results at the upper end of our EBITDA guidance range, booked almost $100 million of new energy orders, and generated $592 million of free cash flow.
As you can see on slide four we maintained strong orders performance in both.
And Sps with larger awards coming from venture Global LNG, and <unk> energy and subsea. We also delivered strong operating results at the upper end of our EBIT guidance range booked almost a $100 million of new energy orders and generated $592 million of free cash.
Cash flow.
Speaker 3: transcript
Speaker 3: We continue to see positive momentum across our portfolio, despite persisting global uncertainty.
We continue to see positive momentum across our portfolio despite persistent global uncertainty.
Turning to the macro on slide five oil prices have rebounded as the combination of resilient oil demand and production cuts have tightened the market as a result, the oil market is likely to see inventory draws through the rest of 2023.
Speaker 3: transcript
Speaker 3: Turning to the macro on slide five, oil prices have rebounded as a combination of resilient oil demand and production cuts have tightened the market. As a result, the oil market is likely to see inventory draws through the rest of 2023.
Speaker 3: transcript
Speaker 3: Continued discipline from the world's largest producers, the pace of oil demand growth in the face of economic uncertainty and geopolitical risk will be important factors to monitor as we look into 2024.
<unk> disciplined from the world's largest producers the pace of oil demand growth in the face of economic uncertainty and geopolitical risks will be important factors to monitor as we look into 2024.
Speaker 3: transcript
Speaker 3: While all prices have strengthened during the second half of this year, upstream development plans are mostly set through year end. Therefore, we remain confident in our 2023 outlook.
While oil prices have strengthened during the second half of this year.
<unk> development plans are mostly sat through year end. Therefore, we remain confident in our 2023 outlook.
Speaker 3: transcript
Speaker 3: We still expect international drilling and completion spending to be up year over year in the mid teens and North America up by mid to high single digits.
We still expect international drilling and completion spending to be up year over year in the mid teens and North America up by mid to high single digits.
Speaker 3: transcript
Speaker 3: As we have said previously, we expect this upstream spending cycle to be more durable and less sensitive to commodity price swings relative to prior cycle.
As we have said previously we expect this upstream spending cycle to be more durable and less sensitive to commodity price swings relative to prior cycles.
Speaker 3: transcript
Speaker 3: Higher hydrocarbon prices do provide positive momentum into operators development plans for next year.
Higher hydrocarbon prices do provide positive momentum and to operate as development plans for next year.
Speaker 3: transcript
Speaker 3: While it is still early and with the caveat there is growing to your political risk, we do see another year of solid upstream spending growth in 2024, led by international and off-short
While it is still early and with the caveat there is the growing geopolitical risks, we do see another year of solid upstream spending growth in 2024 led by international and offshore markets.
In the offshore market, specifically, we were awarded 21 subsea trees during the quarter, which includes a significant equipment order from our sub Saharan African operator.
Speaker 3: transcript
Speaker 3: In the offshore market specifically, we were awarded 21 subsea trees during the quarter, which includes a significant equipment order from a sub-Saharan African operate.
Speaker 3: transcript
Speaker 3: This award expands Baker Hughes' presence in offshore angola and consists of 11 deep water horizontal trees, up tire manifolds and subsequent...
This award expands Baker Hughes has presence in offshore Angola and consists of 11 deepwater horizontal trees up tire manifolds and subsea controls.
Our FSC also saw continued growth in the north sea booking two major multiyear contracts from <unk> energy, one being a long term contract for well intervention and exploration logging services and the other being in order to deliver seven vertical three systems for the Balder field.
Speaker 3: transcript
Speaker 3: OFC also saw continued growth in the North Sea, looking to major multi-year contracts from via energy, one being a long-term contract for well intervention and exploration logging services, and the other being an order to deliver seven vertical tree systems for the Balda field.
Operator: Good day, ladies and gentlemen, and welcome to the Baker Hughes Company, third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. Later, we could duck a question and answer session instructions will follow at that time. As a reminder, the conference call is being recorded.
Speaker 3: transcript
Speaker 3: TANNING TO LNG, despite a soft economy, the global LNG market remains fundamentally tight.
Turning to LNG despite.
Despite a soft economy, the global LNG market remains fundamentally tight.
Speaker 3: transcript
Speaker 3: This tightness is evidenced by the recent LNG price spikes that resulted from the current geopolitical situation and strikes in Australia by LNG workers, which temporarily interrupted operations at several LNG facilities.
This tightness as evidenced by the recent LNG price spikes that resulted from the current geopolitical situation and strikes in Australia by LNG, Wackos, which temporarily interrupted operations at several LNG facilities.
Chase Mulvehill: I would like to introduce your host for today's conference, Mr. Chase Mulvehill, Vice President of the Investor Relations, third you may begin. Thank you, Justin. Good morning, everyone, and welcome to Baker Hughes, third quarter 2023 earnings conference call. Here with me are Chairman and CEO Lorenzo Simonelli and our CFO Nancy Beesey. The earnings release we issued yesterday evening can be found on our website at Baker Hughes.com. We will also be using presentation with our prepared remarks during this webcast, which can also be found on our website.
In the third quarter global LNG demand was up approximately one 5% year over year.
Speaker 3: transcript
Speaker 3: In the third quarter, global LNG demand was up approximately 1.5% year over year.
Year to date global LNG demand has reached record levels at just over 300 MTA.
Speaker 3: Here to date, global LNG demands has reached record levels at just over 300 MTPAs.
Speaker 3: transcript
Speaker 3: This is despite soft event anticipated gas demand, an economic weakness, persisting in key LNG-consuming markets like Europe and China.
This is despite softer than anticipated gas demand and economic weakness persisting and key LNG consuming markets like Europe and China.
Chase Mulvehill: 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 risk and assumptions. Please review our SEC filings and website for a discussion of the factors that could cause actual results to differ materially. Reconciliation of operating income and other gap to non-gap measures can be found in our earnings release.
Globally, we expect 2023 LNG demand to approach 410 M tpa or up about 2% compared to last year.
Speaker 3: transcript
Speaker 3: Globally, we expect 2023 LNG demand to approach 410 MTPA, or up about 2% compared to last year.
Speaker 3: transcript
Speaker 3: with estimated global nameplate capacity of 490 MTPA this year. Effective utilization is expected to be over 90%, which has historically represented a type mark.
With estimated global nameplate capacity of 490 <unk>. This year effective utilization is expected to be over 90%, which has historically represented a tight market.
Lorenzo Simonelli: With that, I'll turn the call over to Lorenzo. Thank you, Chase.
Speaker 3: transcript
Speaker 3: Looking into 2024, we forecast LNG demand to increase by 3%, which should result in utilization rates remaining at elevated levels, as we forecast just 15 MTPA of Nameplate Capacity coming online next year.
Looking into 2024, we forecast LNG demand to increase by 3%, which should result in utilization rates remaining at elevated levels. As we forecast just 15 MTA of nameplate capacity coming online next year.
Lorenzo Simonelli: Good morning, everyone, and thanks for joining us. We were pleased with our third quarter results and remain optimistic on the outlook. As you can see on slide four, we maintain strong orders performance in both IET and FSPS, with large awards coming from venture global in LNG, and our energy in subsea. We also delivered strong operating results at the upper end of our EBITDA guidance range. We've worked almost $100 million of new energy orders and generated $592 million of free cash flow.
Speaker 3: transcript
Speaker 3: Looking out to 2025 and 2026, we see similar trend of supply growth being balanced by the Marngrove, which should keep global LNG markets at relatively strong utilization levels.
Looking out to 2025 and 2026, we see similar trend of supply growth being balanced by demand growth, which should keep global LNG markets at relatively strong utilization levels.
LNG prices remain healthy, which has helped to sustain the strength in offtake contracting a key driver of LNG.
Speaker 3: transcript
Speaker 3: LNG prices remain healthy, which has helped to sustain the strength and off-take contracting a key driver of LNG FID.
Lorenzo Simonelli: We continue to see positive momentum across our portfolio, despite persisting global uncertainty. Turning to the macro on slide five, oil prices have rebounded as the combination of resilient oil demand and production cuts have tightened the market. As a result, the oil market is likely to see inventory draws through the rest of 2023. Continue discipline from the world's largest producers, the pace of oil demand growth in the face of economic uncertainty and geopolitical risk will be important factors to monitor as we look into 2024.
During the quarter, we received in order to provide additional liquefaction equipment and power island to venture global as part of our Upsized Master equipment supply agreement of over 100 MTA.
Speaker 3: transcript
Speaker 3: During the quarter, we received an order to provide additional liquefaction equipment and a power island to venture global as part of our upsized master equipment supply agreement of over 100 MTPAs. As a reminder, we have provided LNG modules for both adventure global's 10 MTPA Calcachu Pass and 20 MTPA Placomans project.
As a reminder, we have provided LNG modules for both venture Global's 10, MTP Calcasieu pass and 20 MTA Plaquemines projects.
Additionally, we were pleased to be recently awarded by App not gas on behalf of act not two electric liquefaction systems for the nine six MTA risk LNG project in the United Arab Emirates.
Speaker 3: transcript
Speaker 3: Additionally, we were pleased to be recently awarded by AdNOT Gas on behalf of AdNOT to electric liquefaction systems for the 9.6 MTPA RIRTH LNG project in the United Arab Emirates.
Lorenzo Simonelli: While oil prices have strengthened during the second half of this year, upstream development plans are mostly set through year end. Therefore, we remain confident in our 2023 outlook. We still expect international drilling and completion spending to be up year over year in the mid teens and North America up by mid to high single digits. As we have said previously, we expect this upstream spending cycle to be more durable and less sensitive to commodity price swings relative to prior cycles.
Speaker 3: transcript
Speaker 3: The award is expected to be booked in the fourth quarter of 2023 and was announced that this year's
The award is expected to be booked in the fourth quarter of 2023.
It was announced at this year's <unk> conference.
Speaker 3: transcript
Speaker 3: The LNG trains will be driven by Baker's users 75 MW brush electric motor technology and will feature our state-of-the-art compressor technology, making Rua's LNG one of the first all-electric LNG projects in the Middle East.
The LNG trains will be driven by Baker Hughes is 75 megawatt brush electric motor technology and will feature our state of the art compressor technology, making ruins LNG one of the first all electric LNG projects in the Middle East.
We are pleased to see continued traction from brush power generation, which we acquired in 2022 to enhance our industrial electric machinery portfolio and to support our strategic commitment to provide lower carbon solutions.
Speaker 3: transcript
Speaker 3: We are pleased to see continued traction from brush power generation, which we acquired in 2022 to enhance our industrial electric machinery portfolio and to support our strategic commitment to provide lower carbon solutions.
Lorenzo Simonelli: Higher hydrocarbon prices do provide positive momentum into operators development plans for next year. While it is still early and with the caveat there is growing geopolitical risk, we do see another year of solid upstream spending growth in 2024, led by international and offshore markets, markets. In the offshore market specifically, we were awarded 21 subsea trees during the quarter, which includes a significant equipment order from a sub-Saharan African operator. This award expands Baker Hughes' presence in offshore angola and consists of 11 deep water horizontal trees, optiomanifolds and subsea controls.
Speaker 3: transcript
Speaker 3: Since then, we have secured several additional orders for our electric machinery portfolio, including a contract from WISON in the first quarter for four ELNG compressor trains in Sub-Saharan Africa.
Since then we have secured several additional orders for our electric machinery portfolio, including a contract from weather in the first quarter before LNG compressor trains in sub Saharan Africa.
These recent successes of brush further validate our strategy of investing in bolt on M&A opportunities that can complement the current IGT and OFC portfolios as well as our efforts and new energy.
Speaker 3: transcript
Speaker 3: These recent successes of brush further validate our strategy of investing in bolt-on M&A opportunities that can complement the current IIT and OFAC portfolios, as well as our efforts in new energy.
Turning to slide six through the first quarter 53, MTA of capacity has taken FID this year.
Lorenzo Simonelli: OFSE also saw continued growth in the North Sea, booking two major multi-year contracts from via energy, one being a long-term contract for well intervention and exploration logging services, and the other being an order to deliver seven vertical tree systems for the Balda field. PANning to LNG, despite a soft economy, the global LNG market remains fundamentally tight. This tightness is evidenced by the recent LNG price spikes that resulted from the current geopolitical situation and strikes in Australia by LNG workers, which temporarily interrupted operations at several LNG facilities.
Speaker 3: transcript
Speaker 3: Counting to slide six, through the third quarter, 53 MTPA of capacity has taken FID this year.
For 2023, we expect to book LNG orders totaling approximately 80 M Tpa.
Speaker 3: transcript
Speaker 3: For 2023, we expect to book LNG orders totaling approximately 80 MCPA. Given we sometimes receive larger LNG orders before projects have taken FID.
Given we sometimes receive larger LNG orders before projects have taken.
Lorenzo Simonelli: In the third quarter, global LNG demand was up approximately 1.5 percent year over year. Yet to date, global LNG demand has reached record levels at just over 300 MTPA. This is despite soft of an anticipated gas demand and economic weakness persisting in key LNG-consuming markets like Europe and China. Globally, we expect 2023 LNG demand to approach 410 MTPA or up about 2 percent compared to last year. With estimated global nameplate capacity of 490 MTPA this year, effective utilization is expected to be over 90 percent which has historically represented a tight market.
Speaker 3: transcript
Speaker 3: The LNG project pipeline remains strong, both in the US and international.
The LNG project pipeline remains strong both in the U S and internationally.
Speaker 3: transcript
Speaker 3: Therefore, we expect to see similar year-over-year levels of FID activity in 2024 and could see between 30 to 60 MTPA of LNGFIDs in both 2025 and 2026.
Therefore, we expect to see similar year over year levels of activity in 2024.
And could see between 30 to 60 MTA of LNG <unk> in both 2025 and 2026.
Based on existing capacity projects under construction and future <unk> in the pipeline. We have line of sight for global LNG installed capacity to reach 800 MTA by the end of 2030.
Speaker 3: transcript
Speaker 3: Based on existing capacity, projects on the construction and future FIDs in the pipeline, line of sight for global LNG installed capacity to reach 800 MTPA by the end of 25th.
Speaker 3: transcript
Speaker 3: This represents an almost 70% increase in name-belheight capacity from 2022, which provides significant near-term growth for gas tech equipment and further long-term structural growth for gas tech service.
This represents an almost 70% increase in nameplate capacity from 2022, which provides significant near term growth for gas tech equipment and further long term structural growth for gas Tech services.
Speaker 3: transcript
Speaker 3: Importantly, since 2017, there have been 200 and four MTPA of LNGFIDs. Embaiky's use has been selected for 201 MTPA of this new capacity.
Importantly, since 2017 that have been 204 MTA of LNG <unk> and Baker Hughes has been selected for 201 MTA of this new capacity.
Speaker 3: transcript
Speaker 3: These projects are scheduled to come online over the coming years, representing an almost 50% increase in our global liquefaction installed base between now and 2028.
These projects are scheduled to come online over the coming years, representing an almost 50% increase in our global liquefaction installed base between now and 2028.
Lorenzo Simonelli: Looking into 2024, we forecast LNG demand to increase by 3 percent, which should result in utilization rates remaining at elevated levels as we forecast just 15 MTPA of nameplate capacity coming online next year. Looking out to 2025 and 2026, we see similar trend of supply growth being balanced by demand growth, which should keep global LNG markets at relatively strong utilization levels. LNG prices remain healthy, which has helped to sustain the strength in off-take contracting, a key driver of LNG FIDs.
Turning to slide seven we have long held the view that natural gas is an abundant low carbon and versatile energy source it.
Speaker 3: transcript
Speaker 3: Turning to slide seven, we have long held the view that natural gas is an abundant low carbon and vast tile energy source.
Speaker 3: transcript
Speaker 3: It will play a critical role as both a transition and destination fuel. Accordingly, natural gas will be fundamental in satisfying the world's energy needs for many decades to come, while also improving air quality and reducing global emissions, displacing coal in the broader energy mix.
It will play a critical role as both a transition in destination fuel.
Accordingly, natural gas will be fundamental in satisfying the world's energy needs for many decades to come while also improving air quality and reducing global emissions displacing coal in the broader energy mix.
We forecast our primary energy demand will continue to grow beyond 2040, due to rising population and increasing consumption per capita in the developing world.
Speaker 3: transcript
Speaker 3: We forecast that primary energy demand will continue to grow beyond 2040, due to rising population and increasing consumption per capita in the developing world. However, it is essential to meet this growing demand with affordable and reliable energy to ensure a strong global economy.
Lorenzo Simonelli: During the quarter, we received an order to provide additional liquefaction equipment and a power island to venture global as part of our upsized master equipment supply agreement of over 100 MTPA. As a reminder, we have provided LNG modules for both venture globals 10 MTPA Calpissue Pass and 20 MTPA Placomans projects. Additionally, we were pleased to be recently awarded by AdNoc Gas on behalf of AdNoc to electric liquefaction systems for the 9.6 MTPA RIRTH LNG project in the United Arab Emirates.
However, it is essential to meet this growing demand with affordable and reliable energy to ensure a strong global economy.
Today's mix of primary energy demand is still heavily reliant upon coal, which accounted for 24% of global energy demand in 2022.
Speaker 3: transcript
Speaker 3: Today's mix of primary energy demand is still heavily reliant upon coal, which accounted for 24% of global energy demand in 2022.
In many Asian countries, like China, and India coal has a much higher share of the energy mix.
Speaker 3: transcript
Speaker 3: In many Asian countries, like China and India, coal is a much higher share of the energy mix.
Speaker 3: transcript
Speaker 3: This is the opportunity for cleaner burning natural gas to be paired with renewables and or CCUS as a base load energy source to display coal in the energy mix over the coming decades.
This is the opportunity for cleaner burning natural gas to be paired with renewables and <unk> as a base load energy source to displace coal in the energy mix over the coming decades.
Lorenzo Simonelli: The award is expected to be booked in the fourth quarter of 2023, and was announced that this year's ADAPEC conference. The LNG trains will be driven by Baker Hughes' 75 Megawatt brush electric motor technology and will feature our state-of-the-art compressor technology, making Rua's LNG one of the first all-electric LNG projects in the Middle East. We are pleased to see continued traction from brush power generation, which we acquired in 2022 to enhance our industrial electric machinery portfolio and to support our strategic commitment to provide lower carbon solutions.
That being said.
Speaker 3: transcript
Speaker 3: That being said, all energy sources will be needed to me increasing energy demand, although with an increasing importance on minimizing global emissions.
All energy sources will be needed to meet increasing energy demand, although we have an increasing importance on minimizing global emissions.
Speaker 3: transcript
Speaker 3: Importantly, many of our customers, long-term spending plans, are beginning to reflect this evolving energy mix.
Importantly, many of our customers long term spending plans are beginning to reflect this evolving energy mix.
Speaker 3: transcript
Speaker 3: This presents significant customer synergies across our IET and OFSE portfolios, providing a unique opportunity to be an integrated solutions provider as the energy transition takes shape.
This presents significant customer synergies across our <unk> and OFC portfolios, providing a unique opportunity to be an integrated solutions provider as the energy transition takes shape.
Lorenzo Simonelli: Since then, we have secured several additional orders for our electric machinery portfolio, including a contract from Whizzan in the first quarter before LNG compressor trains in Sub-Saharan Africa. These recent successes of brush further validate our strategy of investing in bolt-on M&A opportunities that can complement the current IET and OFAC portfolios, as well as our efforts in new energy. Turning to slide 6, through the third quarter, 53 MTPA of capacity has taken FID this year.
Turning to slide eight as.
Speaker 3: transcript
Speaker 3: As we take energy forward, making it safer, cleaner, and more efficient for people in the planet, we are focused on our strategic framework of transforming our core to strengthen our margin and returns profile, while also investing for growth and positioning for new frontiers in the energy transition.
As we take energy forward, making it safer cleaner and more efficient for people and the planet. We are focused on our strategic framework of transforming our core to strengthen our margin and returns profile, while also investing for growth and positioning for new frontiers in the energy transition.
Through these key pillars, our company is building and executing a plan to deliver sustainable value for our shareholders and stakeholders.
Speaker 3: transcript
Speaker 3: Through these key pillars, our company is building and executing a plan to deliver sustainable value for our shareholders and stakeholders.
As our strategy and the energy markets have evolved we have been increasingly focused on the execution of our strategy across three time horizons.
Speaker 3: transcript
Speaker 3: As our strategy and the energy markets have evolved, we have been increasingly focused on the execution of our strategy across free time horizon.
Speaker 3: transcript
Speaker 3: Across the first time horizon, which spans through 2025, we are focused on driving enhanced margin of creation through organizational simplification and expanded efficiencies, operational discipline, and optimization of asset and people productivity. Importantly, these actions are well within our control.
Across the first time horizon, which spans through 2025, we are focused on driving enhanced margin accretion through organizational simplification and expanded efficiencies operational discipline and optimization of asset and people productivity importantly.
Lorenzo Simonelli: For 2023, we expect to book LNG orders totaling approximately 80 MTPA, given we some times received larger LNG orders before projects have taken FID. The LNG project pipeline remains strong, both in the US and internationally. Therefore, we expect to see similar year-over-year levels of FID activity in 2024 and could see between 30 to 60 MTPA of LNG FIDs in both 2025 and 2026. Based on existing capacity, projects on the construction and future FIDs in the pipeline, we have line-of-site for global LNG installed capacity to reach 800 MTPA by the end of 2030.
These actions are well within our control.
During this period Baker Hughes remains poised to benefit from the macro tailwind that we see across our two business segments.
Speaker 3: transcript
Speaker 3: During this period, Bakers use remains poised benefit from the macro tailwinds that we see across our two business segments.
Specifically, we remain well positioned to benefit from the continued strength in the natural gas and LNG growth cycle as well as a multiyear increases in upstream spending driven by international and offshore markets.
Speaker 3: transcript
Speaker 3: Specifically, we remain well positioned to benefit from the continued strength in the natural gas and energy growth cycle as well as a multi-year increases in upstream spending driven by international and offshore markets.
Speaker 3: transcript
Speaker 3: We also remain focused on navigating short-term supply constraints.
We also remain focused on navigating short term supply constraints specifically.
Specifically in aerospace sector, and broader macroeconomic and political uncertainty.
Speaker 3: transcript
Speaker 3: specifically in aerospace sector and brought a macro economic and political uncertain.
Lorenzo Simonelli: This represents an almost 70% increase in name-belate capacity from 2022, which provides significant near-term growth for gas tech equipment and further long-term structural growth for gas tech services. Importantly, since 2017, there have been 204 MTPA of LNG FIDs, and Baker Hughes has been selected for 201 MTPA of this new capacity. These projects are scheduled to come online over the coming years, representing an almost 50% increase in our global liquefaction installed base between now and 2028.
Throughout horizon, one we will be focused on transforming our business and simplifying the way we work <unk>.
Speaker 3: transcript
Speaker 3: Throughout Horizon One, we will be focused on transforming our business and simplifying the way we work.
Speaker 3: transcript
Speaker 3: Additionally, we remain committed to further developing and commercializing our new energy portfolio, while also evolving our digital offering.
Additionally, we remain committed to further developing and commercializing a new energy portfolio, while also evolving our digital offerings.
Speaker 3: transcript
Speaker 3: All of this will underpin our goals to deliver 20% EBITDA margins in OFC by 2025 and in IET by 2026.
All of this will underpin our goal to deliver 20% EBITDA margins and OFC by 2025 and in <unk> by 2026.
During the second horizon, which extends out to 2027, the focus shift towards investing for the next phase of growth, where our strategy is to solidify our presence in the new energy and industrial sectors, while leveraging gas tech services growth across our expanding installed equipment base.
Speaker 3: transcript
Speaker 3: During the second horizon, which extends out to 2027, the focus shift towards investing for the next phase of growth, where our strategy is to solidify our presence in the new energy and industrial sectors, while leveraging gas tech services growth across our expanding installed equipment base.
Lorenzo Simonelli: Turning to slide 7, we have long held the view that natural gas is an abundant, low-carbon, and vast-tile energy source. It will play a critical role as both a transition and destination fuel. Accordingly, natural gas will be fundamental in satisfying the world's energy needs for many decades to come, while also improving air quality and reducing global emissions, displacing coal in the broader energy mix. We forecast that primary energy demand will continue to grow beyond 2040, due to rising population and increasing consumption per capita in the developing world.
At the same time, we see upstream in natural gas spending continuing to grow at a lower rate.
Speaker 3: transcript
Speaker 3: At the same time, we see upstream and natural gas spending continuing to grow at the lower rate.
Speaker 3: transcript
Speaker 3: We also expect an increasing customer focus on efficiency gains and emissions reductions, offering meaningful opportunities for our IET and OFSE digital businesses. As we further deploy our Lucifer, Corden and Flair reduction solutions during this rise.
We also expect an increase in customer focus on efficiency gains and emissions reductions.
<unk> meaningful opportunities for our <unk> and OFC digital businesses as we further deploy our Lucifer accordant and flare reduction solutions during this horizon.
Lorenzo Simonelli: However, it is essential to meet this growing demand with affordable and reliable energy to ensure a strong global economy. Today's mix of primary energy demand is still heavily reliant upon coal, which accounted for 24% of global energy demand in 2022. In many Asian countries, like China and India, coal is a much higher share of the energy mix. This is the opportunity for cleaner burning natural gas to be paired with renewables and or CCUS as a base load energy source to the displaced coal in the energy mix over the coming decades.
Speaker 3: transcript
Speaker 3: To illustrate, the IEA estimates the improving efficiencies by just 10% across oil and gas operations would save almost half a gigaton of CO2 per year, which is equivalent to achieving 5% of the Paris Agreement goals.
To illustrate the IEA estimates improving efficiencies by just 10% across oil and gas operations would save almost half a gigaton of cotwo per year, which is equivalent to achieving 5% of the Paris agreement goals.
Speaker 3: transcript
Speaker 3: Also in Horizon 2, we expect to exceed our ROIC targets of 15% and 20% in OFSC and IET respectively. And drive further margin expansions across both business segments above our stated 20% EBITDA margin target.
Also in horizon, two we expect to exceed our ROIC targets of 15% and 20% and our FSC and <unk> respectively.
And drive further margin expansions across both business segments above our stated 20% EBITDA margin targets.
Speaker 3: transcript
Speaker 3: Lastly, Horizon Free looks to 2030 and beyond, where our execution over the coming years will position Baytis use to compete across many new industrial and energy frontiers, including CCUS, Hydrogen, Clean Power and Geofurm.
Lastly, horizon free looks to <unk> and beyond where our execution over the coming years will position Baker Hughes to compete across many new industrial and energy frontiers, including Cc U S.
Lorenzo Simonelli: That being said, all energy sources will be needed to meet increasing energy demand, although with an increasing importance on minimizing global emissions. Importantly, many of our customers long-term spending plans are beginning to reflect this evolving energy mix. This presents significant customer synergies across our IET and OFSE portfolios, providing a unique opportunity to be an integrated solutions provider as the energy transition takes shape. Turning to slide 8. As we take energy forward, making it safer, cleaner, and more efficient for people in the planet, we are focused on our strategic framework of transforming our coal to strengthen our margin and returns profile, while also investing for growth and positioning for new frontiers in the energy transition.
Hydrogen clean power and geothermal.
By this time, we expect decarbonization solutions to be a fundamental component and in most cases, a prerequisite for energy projects.
Speaker 3: transcript
Speaker 3: By this time, we expect decarbonization solutions to be a fundamental component. And in most cases, a prerequisite for energy projects, regardless of the end mark.
<unk> of the end market.
Speaker 3: transcript
Speaker 3: The need for smarter, more efficient energy solutions and emissions management will have family extended into the industrial sector.
The need for smarter more efficient energy solutions and emissions management, while our family extended into the industrial sector.
Considering this backdrop, we expect our new energy orders to reach $6 billion to $7 billion in 2030 and across a much broader customer base.
Speaker 3: transcript
Speaker 3: Considering this backdrop, we expect our new energy orders to reach $7 billion in 2030 and across a much broader customer base.
Before turning over to Nancy I would like to speak to the positive momentum that Baker Hughes is built during 2023.
Speaker 3: transcript
Speaker 3: Before turning over to Nancy, I'd like to speak to the positive momentum that Bayke Hughes has built during 2023 and where we have experienced strengthening tailwinds in both OFC and IET.
Lorenzo Simonelli: Through these key pillars, our company is building an executing a plan to deliver sustainable value for our shareholders and stakeholders. As our strategy and the energy markets have evolved, we have been increasingly focused on the execution of our strategy across free time horizons. Across the first time horizon, which spans through 2025, we are focused on driving enhanced margin accretion through organizational simplification and expanded efficiencies, operational discipline, and optimization of asset and people productivity.
And while we have experienced strengthening tailwind in both OFC and.
Speaker 3: transcript
Speaker 3: International and offshore markets are set to drive the strongest year of OFSE growth in more than five years.
International and offshore markets are set to drive the strongest year of OFC growth and more than five years.
Speaker 3: transcript
Speaker 3: While continued robust LNG activity is set to push IIT orders to yet another record year in 2023.
While continued robust LNG activity is set to push out orders to yet another record year in 2023.
Speaker 3: transcript
Speaker 3: And most importantly, our improved operational execution and cost structure and continued commitment to our customers are helping us to deliver on our commitments to our shareholders. With that,
And most importantly, our improved operational execution and cost structure and continued commitment to our customers are helping us to deliver on our commitments to our shareholders.
Lorenzo Simonelli: Importantly, these actions are well within our control. During this period, Bakers Use remains poised benefit from the macro tailwinds that we see across our two business segments. Specifically, we remain well positioned to benefit from the continued strength in the natural gas and energy growth cycle, as well as the multi-year increases in upstream spending driven by international and offshore markets. We also remain focused on navigating short-term supply constraints, specifically in aerospace sector and broader macroeconomic and political uncertainty.
With that I'll turn the call over to Nancy.
Lorenzo I will begin on slide 10, with an overview of our consolidated results and then briefly talk to segment details before outlining our fourth quarter and full year 2023 outlook. We were very pleased with our third quarter results as both segments continue to execute well and benefit from market tailwind.
Speaker 4: transcript
Speaker 4: So I will begin on slide 10 with an overview of our consolidated results and then briefly talk to segment details before outlining our fourth quarter and full year 2023 out.
Speaker 4: transcript
Speaker 4: we were very pleased with our third quarter results, as both segments continue to execute well and benefit from market tail.
Speaker 4: transcript
Speaker 4: Adjusted EBITDA of $983 million came in at the high end of our guidance.
Adjusted EBITDA of $983 million came in at the high end of our guidance range.
Speaker 4: transcript
Speaker 4: Mostly due to better than expected IET performance, driven by strong backlog conversion and gas tech equipment, and continued improving execution and industrial.
Due to better than expected <unk> performance, driven by strong backlog conversion in gas tech equipment and continued improving execution in industrial tech.
Speaker 4: transcript
Speaker 4: Gap operating income was $714 million during the quarter. Adjusted operating income was $716 million. Gap earnings per share were 51 cents.
GAAP operating income was $714 million during the quarter adjust.
Lorenzo Simonelli: Throughout horizon one, we will be focused on transforming our business and simplifying the way we work. Additionally, we remain committed to further developing and commercializing our new energy portfolio, while also evolving our digital offerings. All of this will underpin our goals to deliver 20% EBITDA margins in OFC by 2025 and in IET by 2026. During the second horizon, which extends out to 2027, the focus shift towards investing for the next phase of growth, where our strategy is to solidify our presence in the new energy and industrial sectors, while leveraging gas tech services growth across our expanding At the same time, we see upstream and natural gas spending continuing to grow at a lower rate.
Adjusted operating income was $716 million.
GAAP earnings per share were <unk> 51.
Excluding adjusting items earnings per share were <unk> 42.
Speaker 4: transcript
Speaker 4: Orders for both business segments maintain strong momentum, highlighted by another record quarter for IET, and a third consecutive quarter of at least $1 billion of sub-C and surface pressure systems orders. The first time this has happened since 2000.
Orders for both business segments maintained strong momentum highlighted by another record quarter for IEP and the third consecutive quarter of at least $1 billion of subsea and surface pressure systems orders. The first time. This has happened since 2014.
New energy orders totaled almost $100 million this quarter, which brings year to date orders to just under $540 million and puts us on track to hit our 6% to $700 million target range.
Speaker 4: transcript
Speaker 4: New energy orders totaled almost $100 million this quarter, which brings year-to-day orders to just under $540 million and puts us on track to hit our $600 to $700 million target.
Speaker 4: transcript
Speaker 4: Due to the sustained strength in orders, IET RPO is at record levels. An SSPS RPO is now at the highest level since 2015.
Due to the sustained strength in orders I E.
<unk> is at record levels and <unk> is now at the highest level since 2015, which provides strong volume and earnings visibility over the coming years.
Speaker 4: transcript
Speaker 4: which provides strong volume and earnings visibility over the coming years.
Lorenzo Simonelli: We also expect an increasing customer focus on efficiency gains and emissions reductions, offering meaningful opportunities for our IET and OFSE digital businesses, as we further deploy our Lucifer, cordoned and flare reduction solutions during this horizon. To illustrate, the IEA estimates the improving efficiencies by just 10% across oil and gas operations would save almost half a gigaton of CO2 per year, which is equivalent to achieving 5% of the Paris Agreement goals. Also in Horizon 2, we expect to exceed our ROIC targets of 15% and 20% in OFSE and IET respectively.
Speaker 4: transcript
Speaker 4: Free cash flow was strong again this quarter, coming in at $592 million, and resulting in free cash flow conversion from adjusted EBITDA.
Free cash flow was strong again this quarter coming in at $592 million and resulting in free cash flow conversion from adjusted EBITDA of 60%.
Speaker 4: transcript
Speaker 4: We continue to target pre-cash flow conversion of 45 to 50...
We continue to target free cash flow conversion of 45% to 50% this year.
Turning to slide 11, our balance sheet remains strong as we ended the third quarter with cash of $3 2 billion and a net debt to trailing 12 month adjusted EBITDA ratio of one times.
Speaker 4: transcript
Speaker 4: Turning to slide 11, our balance sheet remains strong. As we ended the third quarter with cash of $3.2 billion, and a net debt to trailing 12-month adjusted EBITDA ratio of the third quarter with cash of $3.2 billion.
Speaker 4: transcript
Speaker 4: Turning to carpet allocation on slide 12. We continue to return excess free cash loader share.
Turning to capital allocation on slide 12, we continue to return excess free cash flow to shareholders. We recently increased our dividend by a penny to <unk> 20 per quarter, we remain.
Speaker 4: transcript
Speaker 4: We recently increased our dividend by a penny to 20 cents per quarter.
Speaker 4: transcript
Speaker 4: We remain committed to growing our dividend over time, with growth ultimately tied to the structural earnings power and growth of the-
Committed to growing our dividend over time with growth ultimately tied to the structural earnings power and growth of the company.
Speaker 4: transcript
Speaker 4: Additionally, we repurchased $119 million of stock during the quarter, which brings total repurchases at the end of the third quarter to $219 million.
Additionally, we repurchased $119 million of stock during the quarter, which brings total repurchases at the end of the third quarter to $219 million.
Lorenzo Simonelli: And drive further margin expansions across both business segments above our stated 20% EBITDA margin targets. Lastly, Horizon 3 looks to 2030 and beyond where our execution over the coming years will position Baker Hughes to compete across many new industrial and energy frontiers, including CCUS, hydrogen, clean power and geothermal. By this time, we expect decarbonization solutions to be a fundamental component. And in most cases, a prerequisite for energy projects, regardless of the end market.
Including our dividend and buybacks through the end of the third quarter. We have returned $805 million to shareholders. We remain committed to returning 60% to 80% of free cash flow to investors.
Speaker 4: transcript
Speaker 4: including our dividend and buybacks through the end of the third quarter, we have returned $805 million to shareholders.
Speaker 4: transcript
Speaker 4: We remain committed to returning 60 to 80% of pre-cash floats.
Now I will walk you through the business segment results in more detail and give you our thoughts on our forward outlook.
Speaker 4: transcript
Speaker 4: Now I will walk you through the business segment results in more detail and give you our thoughts on our forward outlook. Starting with oil filter.
Starting with oilfield services and equipment on slide 13 the.
The segment performed above expectations in the quarter, driven by better than expected revenue and margin in Sps and a resilient oilfield services performance in North America.
Speaker 4: transcript
Speaker 4: The segment performed above expectations in the quarter, driven by better than expected revenue and margin and SSPS and a resilient oil-filled services
Lorenzo Simonelli: The need for smarter, more efficient energy solutions and emissions management will have firmly extended into the industrial sector. Considering this backdrop, we expect our new energy orders to reach $7 billion in 2030 and across a much broader customer base.
Speaker 4: transcript
Speaker 4: SSPS orders of $1 billion maintained strong momentum as offshore project awards continue at robust
Sps orders of $1 billion maintained strong momentum as offshore project awards continue at robust levels.
Speaker 4: transcript
Speaker 4: Accordingly, SSPS Booktubil 1.3 times was above one for the seventh consecutive quarter, and SSPS RPO now sits at $3.6 billion, which is up 52% versus...
Accordingly, Sps book to Bill of one three times was above one for the seventh consecutive quarter.
<unk> now sits at three 6 billion.
Which is up 52% versus the same quarter last year.
Lorenzo Simonelli: Before turning over to Nancy, I'd like to speak to the positive momentum that Baker Hughes has built during 2023 and where we have experienced strengthening tailwinds in both OFSE and IET. International and offshore markets are set to drive the strongest year of OFSE growth in more than five years. While continued robust energy activity is set to push IET orders to yet another record year in 2023. And most importantly, our improved operational execution and cost structure and continued commitment to our customers are helping us to deliver on our commitments to our shareholders.
Oh FSC revenue in the quarter was $4 billion up 2% sequentially and up 16% year over year.
Speaker 4: transcript
Speaker 4: OFSC revenue in the quarter was $4 billion. Up 2% sequentially and up 16% euro.
Excluding Sps International revenue was up 1% sequentially as declines in Latin America offset increases in other regions.
Speaker 4: transcript
Speaker 4: excluding SSPS, international revenue was up 1% sequentially, as declines in Latin America.
Excluding SBS North America revenue was up 4% sequentially with strength in North America offshore, partially offset by North America land revenues down 2%.
Speaker 4: transcript
Speaker 4: Excluding SSPS, North America revenue was at 4% sequentially with strength in North America offshore partially offset by North America land revenues down 2%. Which outperformed the U.S.
Which outperformed the U S land rig count that fell 10%.
Speaker 4: transcript
Speaker 4: OFSE EBITDA in the quarter with $670 million. Up 5% sequentially and up 27% year over year. We'll also slightly above our guidance midpoint of 665 million.
Hello, FSC EBITDA in the quarter was $670 million.
5% sequentially and up 27% year over year, while also slightly above our guidance midpoint of $665 million.
Nancy Beesey: With that, I'll turn the call over to Nancy. Lorenzo, I will begin on slide 10 with an overview of our consolidated results and then briefly talk to segment details before outlining our fourth quarter and full year 2023 outlook. We were very pleased with our third quarter results as both segments continue to execute well and benefit from market tailwinds.
OFC EBITDA margin rate was 17% with margins, increasing 60 basis points sequentially, and 140 basis points year over year as ssp's margins outperformed expectations.
Speaker 4: transcript
Speaker 4: Well, FSC EBITDA margin rate was 17%. With margins increasing 60 basis points sequentially and 140 basis points year over year, as SSPS margins outperformed expectations. FSC EBITDA margin rate was 18%. With margin increasing 60 basis points year over year, as SSPS margins outperformed expectations. With margin increasing 60 basis points year over year, as SSPS margins outperformed expectations.
Now turning to industrial and energy technology on Slide 14. This segment also performed above expectations again during the quarter. The stronger performance was primarily due to higher volume and gas tech equipment and industrial Tech.
Nancy Beesey: Adjusted EBITDA of $983 million came in at the high end of our guidance range, mostly due to better than expected IET performance driven by strong backlog conversion and gas tech equipment and continued improving execution and industrial tech. Gap operating income was $714 million during the course. Carter, Adjusted Operating Income with $716 million. Gap earnings per share were $0.51, excluding adjusting items earnings per share were $0.42. Orders for both business segments maintain strong momentum, highlighted by another record quarter for IET and a third consecutive quarter of at least $1 billion of subsea and surface pressure systems orders.
Speaker 4: transcript
Speaker 4: The segment also performed above expectations again during the court.
Speaker 4: transcript
Speaker 4: stronger performance was primarily due to higher volume and gas tech equipment and industrial.
Speaker 4: transcript
Speaker 4: slightly offset by lower than expected volume and gas tech services due to delivery timing for upgrades and supply chain challenges.
<unk> offset by lower than expected volume and gas Tech services due to delivery timing for upgrades and supply chain challenges for Aero derivative components.
Speaker 4: transcript
Speaker 4: IET also had record orders this quarter driven by robust LNG of
<unk> also had record orders this quarter driven by robust LNG Awards.
Speaker 4: transcript
Speaker 4: IET orders were $4.3 billion, up 32% sequentially, and up 84% on a year-over-year basis, and included almost $2.5 billion.
<unk> orders were $4 3 billion.
Up 32% sequentially and up 84% on a year over year basis and included almost $2 5 billion of <unk>.
LNG equipment orders.
Speaker 4: transcript
Speaker 4: Major awards during the quarter included liquefaction equipment for an FLNG project in the Eastern Hemisphere.
Major awards during the quarter included liquefaction equipment for an LNG project in the Eastern Hemisphere, and a major award to provide additional liquefaction equipment and power island to venture global.
Speaker 4: transcript
Nancy Beesey: The first $6 million this quarter, which brings year-to-day orders to just under $540 million and puts us on track to hit our $600 to $700 million target range. Due to the sustained strength in orders, IET, RPO is at record levels, and SSPS RPO is now at the highest level since 2015, which provides strong volume and earnings visibility over the coming years. Free cash flow conversion from adjusted EBITDA of 60%. We continue to target free cash flow conversion of 45 to 50% this year.
<unk> ended the quarter at $28 8 billion.
Speaker 4: transcript
Up 5% sequentially.
Gastric equipment, <unk> was $12 $8 billion and gas Tech services RPM was $13 8 billion.
Speaker 4: transcript
Speaker 4: Gas Tech Equipment RPO was $12.8 billion, and Gas Tech Services RPO was 13.8 billion.
Gas Tech equipment book to Bill was two two times the ninth consecutive quarter above one.
Speaker 4: transcript
Speaker 4: Gas Sec Equipment Book to Bill was 2.2 times the ninth consecutive quarter above
Turning to slide 15.
Speaker 4: transcript
Speaker 4: Turning to slide 15, IE2 revenue for the quarter was $2.7 billion. Up 37%.
Revenue for the quarter was $2 7 billion.
Up 37% versus the prior year led by gas Tech equipment growth that was up over 100% year over year, driven by execution and project backlog.
Speaker 4: transcript
Speaker 4: led by gas tech equipment growth that was up over 100% year over year driven by execution and projects.
Nancy Beesey: Turning to slide 11, our balance sheet remains strong, as we ended the third quarter with cash of $3.2 billion and a net debt to trailing 12-month adjusted EBITDA ratio of one time. Turning to capital allocation on slide 12, we continue to return excess free cash flow to shareholders. We recently increased our dividend by a penny to 20 cents per quarter. We remain committed to growing our dividend over time, with growth ultimately tied to the structural earnings power and growth of the company.
<unk> EBITDA was $403 million up 23% year over year and coming in above our guidance midpoint of $385 million.
Speaker 4: transcript
Speaker 4: IETE BITDA was $403 million, up 23% year over year, and coming in above our guidance midpoint of 300-
Speaker 4: transcript
Speaker 4: The DAD margin was 15% down 160 basis points year over year driven by higher equipment mix and higher R&D spend related to our new and
EBITDA margin was 15% down 160 basis points year over year, driven by higher equipment mix and higher R&D spend related to our new energy investments.
Speaker 4: transcript
Speaker 4: This increased R&D spending balances our broader margin improvement objectives with the demands to drive technology growth in our climate technology.
This increased R&D spending balances our broader margin improvement objectives with the demand to drive technology growth in our climate technology solutions portfolio.
Nancy Beesey: Additionally, we repurchased $119 million of stock during the quarter, which brings total repurchases at the end of the third quarter to $219 million. Inquiting our dividend and buybacks through the end of the third quarter, we have returned $805 million to shareholders. We remain committed to returning 60 to 80% of pre-cash flow to investors.
In September we announced the realignment of our product lines across five key value vectors, simplifying our organizational structure to focus operations and decision, making and drive margin and returns improvement.
Speaker 4: transcript
Speaker 4: In September , we announced a realignment of our IET product lines across 5 key value
Speaker 4: transcript
Speaker 4: simplifying our organizational structure to focus operations and decision making and drive margin and
Through this realignment, which was effective on October one and shown on slide 16. We are also providing increased transparency for our Cts business a key growth engine for Baker Hughes as well as integrating our asset performance management capabilities under industrial solutions.
Speaker 4: transcript
Speaker 4: Through this realignment, which was effective on October 1st, and shown on slide 16, we are also providing increased transparency for our CTF.
Nancy Beesey: Now, I will walk you through the business segment results in more detail and give you our thoughts on our forward outlook.
Nancy Beesey: Starting with oil-filled services and equipment on slide 13. The segment performed above expectations in the quarter, driven by better than expected revenue and margin in SSPS and a resilient oil-filled services performance in North America. SSPS orders of $1 billion maintained strong momentum as offshore project awards continue at robust levels. Accordingly, SSPS book to bill of 1.3 times was above one for the seventh consecutive quarter, and SSPS RPO now sits at $3.6 billion, which is up 52% versus the same quarter last year. OFSE revenue in the quarter was $4 billion, up 2% sequentially and up 16% year-over-year.
Speaker 4: transcript
Speaker 4: as well as integrating our asset performance management capabilities under
Before turning to our outlook I would like to quickly speak to a part of our growth story that we think is a key differentiator for Baker Hughes and as highlighted on slide 17 is the visibility we have around structural IGT growth into the latter part of this decade.
Speaker 4: transcript
Speaker 4: Before turning to our outlook, I'd like to quickly speak to a part of our growth story that we think is a key differentiator for big
Speaker 4: transcript
Speaker 4: highlighted on slide 17 is the visibility we have around structural IET growth into the latter part of the
Speaker 4: transcript
Speaker 4: We believe this growth will drive meaningful, pre-cash-flux banation for the company, which we can-
We believe this growth will drive meaningful free cash flow expansion for the company, which we can attribute to four areas.
Speaker 4: transcript
Speaker 4: the first is LNG equipment orders. Based on our expectations.
The first is LNG equipment orders based on our expectation, we will book almost $9 billion of LNG equipment orders across 2022 and 2023.
Speaker 4: transcript
Speaker 4: We will book almost $9 billion of LNG equipment orders across 2022 and 2020-
As a result, our gas tech equipment <unk> is at a record level, giving itt's strong equipment backlog coverage over the next few years.
Speaker 4: transcript
Speaker 4: As a result, our gas tech equipment RPO is at a record level, giving IET strong equipment backlog coverage over the next few years.
Nancy Beesey: Excluding SSPS, international revenue was up 1% sequentially, as declines in Latin America offset increases in other regions. Excluding SSPS, North America revenue was up 4% sequentially with strength in North America offshore partially offset by North America land revenues down 2%, which outperformed the U.S, land rig count that fell 10%. OFSE EBITDA in the quarter was $670 million, up 5% sequentially and up 27% year-over-year, while also slightly above our guidance midpoint at $665 million. $1 million. OFSC EBITDA margin rate was 17%, with margins increasing 60 basis points sequentially and 140 basis points year over year as SSPS margins outperformed expectations.
Second is gas Tech services.
Speaker 4: transcript
Speaker 4: As Lorenzo mentioned, we see the global LNG installed base growing by 70% from today through the end of the
As Lorenzo mentioned, we see the global LNG installed base growing by 70% from today through the end of this decade also the 172 MTA of capacity additions during the 2016 to 2022 time frame will begin to earn increasing service revenue over the medium term.
Speaker 4: transcript
Speaker 4: Also, the 172 MTPA capacity additions during the 2016 to 2022 timeframe will begin to earn increasing service revenue over the media.
Given that Baker Hughes equipment is installed on the majority of these projects, we have significant earnings and returns visibility through 2030 and beyond from a gas tax services franchise as LNG accounts for almost 80% of our $13 8 billion Arpino and gas Tech services.
Speaker 4: transcript
Speaker 4: Given that Baker Hughes' equipment is installed on the majority of these projects, we have significant earnings and returns visibility through 2030 and beyond. From our gas tech service.
Speaker 4: transcript
Speaker 4: as LNG accounts for almost 80% of our $13.8 billion RPO.
The third growth area that we see is across industrial solutions and industrial products. We believe that these businesses can be so much more than a collection of technologies that they are today.
Speaker 4: transcript
Speaker 4: The third growth area that we see is across industrial solutions and industrial products. We believe that these businesses can be so much more than the collection of technologies that they are.
Nancy Beesey: Now turning to industrial and energy technology on slide 14. This segment also performed above expectations again during the quarter. The stronger performance was primarily due to higher volume and gas tech equipment and industrial tech, slightly offset by lower than expected volume and gas tech services due to delivery timing for upgrades and supply chain challenges for aeroderabative components.
Speaker 4: transcript
Speaker 4: For industrial solutions, the focus of this platform is to provide an integrated suite of solutions supporting industrial asset performance management and process optimization. There is a significant opportunity to advance solutions that can
For industrial solutions. The focus of this platform is to provide an integrated suite of solutions supporting industrial asset performance management and process optimization.
A significant opportunity to advance solutions that can provide recurring revenue streams at accretive margin rates starting.
Our starting point for this is our <unk> platform, which we launched in January of this year.
Speaker 4: transcript
Speaker 4: Starting point for this is our Coordinate platform, which we launched in January .
Nancy Beesey: IET also had record orders this quarter driven by robust LNG awards. IET orders were $4.3 billion, up 32% sequentially, and up 84% on a year over year basis, and included almost $2.5 billion of LNG equipment orders. Major awards during the quarter included liquefaction equipment for an FLNG project in the Eastern Hemisphere, and a major award to provide additional liquefaction equipment in a power island to venture global. IET, RPO, ended the quarter at $28.8 billion, up 5% sequentially.
In industrial products, we've been focusing on driving further simplification and unifying the industrial hardware capabilities that we have in our portfolio today as.
Speaker 4: transcript
Speaker 4: In industrial products, we've been focusing on driving further simplification and unifying the industrial hardware capabilities that we have in our portfolio.
Speaker 4: transcript
Speaker 4: as we focus on industry verticals that allow for stronger growth opportunities and improve profitability.
As we focus on industry verticals that allow for stronger growth opportunities and improve profitability into the future.
The fourth growth area is new energy, we remain excited about new energy opportunities, where we will focus on differentiated technologies that add value for our customers and Cc U S hydrogen clean power geothermal and emissions management.
Speaker 4: transcript
Speaker 4: The fourth growth area is new energy. We remain excited about new energy opportunities, where we will focus on differentiated technologies that at-
Speaker 4: transcript
Speaker 4: CCUS, Hydrogen, Clean Power, Geothermal, and Emissions.
Speaker 4: transcript
Speaker 4: Accordingly, we see a path to growing new energy orders from our $600 to $700 million target this year towards $6 to $7 billion.
Accordingly, we see a path to growing new energy orders from our $6 million to $700 million target this year towards 6% to $7 billion in 2030.
Nancy Beesey: Gas tech equipment, RPO, was $12.8 billion, and gas tech services RPO was $13.8 billion. Gas tech equipment booked to bill was 2.2 times the ninth consecutive quarter above one. Turning to slide 15, IET revenue for the quarter was $2.7 billion, up 37% versus the prior year, led by gas tech equipment growth that was up over 100% year over year driven by execution and project backlog. IET EBITDA was $403 million, up 23% year over year, and coming in above our guidance midpoint of $385 million.
Next I'd like to update you on our outlook for the two business segments, which is detailed on slide 18.
Speaker 4: transcript
Speaker 4: Next, I'd like to update you on our Outlook for the two business segments, which is detailed on sliding.
Overall, we remain optimistic on the outlook for both OFC and given strong growth tailwind across each business as well as continued operational enhancements to drive backlog execution and margin improvement.
Speaker 4: transcript
Speaker 4: Overall, we remain optimistic on the outlook for both OFC and IET, given strong growth tailwinds across the region.
Speaker 4: transcript
Speaker 4: well as continued operational enhancements to drive backlog execution and margin of
Speaker 4: transcript
Speaker 4: For Baker Hughes, we expect fourth quarter revenue to be between 6.7 and 7.1 billion.
For Baker Hughes, we expect fourth quarter revenue to be between $6 7 million and $7 1 billion and EBITDA between one five and $1 1 billion.
Speaker 4: transcript
Speaker 4: and EBITDA between $1.05 and $1.11 billion. And playing an EBITDA midpoint of $1.105
Implying an EBITDA midpoint of $1 8 billion.
Nancy Beesey: EBITDA margin was 15%, down 160 basis points year over year driven by higher equipment mix and higher R&D spend related to our new energy investments. This increased R&D spending balances our broader margin improvement objectives with the demand to drive technology growth in our climate technology solutions portfolio.
Speaker 4: transcript
Speaker 4: For the full year, we are increasing and narrowing our guidance ranges as we flow through third quarter results and fourth quarter guides.
For the full year, we are increasing and narrowing our guidance ranges as we flow through third quarter results and fourth quarter guidance.
Accordingly, we now expect 2023 Baker Hughes' revenue to be between $25, four and $25 8 million and EBITDA between three seven and $3 8 billion.
Speaker 4: transcript
Speaker 4: $25.4.25.8 billion dollars, and EBITDAB between $3.7.
Alright.
Speaker 4: transcript
Speaker 4: For IET, we expect fourth quarter results to reflect sequential and year-over-year revenue growth for both gas tech and in-
Nancy Beesey: In September, we announced a realignment of our IET product lines across five key value vectors, simplifying our organizational structure to focus operations and decision making and drive margin and returns improvement. Through this realignment, which was effective on October 1st and shown on slide 16, we are also providing increased transparency for our CTS business, a key growth engine for Baker Hughes, as well as integrating our asset performance management capabilities under industrial solutions.
We expect fourth quarter results to reflect sequential and year over year revenue growth for both gas Tech and industrial Tech.
Speaker 4: transcript
Speaker 4: Therefore, we expect fourth quarter IET revenue between $2.8 and $3.1 billion, and EBITDA between $430 and $490.
Therefore, we expect fourth quarter <unk> revenue between $2, eight and $3 1 billion.
And EBITDA between 430 and $490 million.
Speaker 4: transcript
Speaker 4: The major factors driving this range will be the pace of backlog conversion and gas tech equipment and the impact of any aeroderivative supply chain tightness and gas.
The major factors driving this range will be the pace of backlog conversion and gas tech equipment, and the impact of any aero derivative supply chain tightness and gas deck.
Our full year outlook for <unk> remains constructive for orders revenue and EBITDA.
Speaker 4: transcript
Speaker 4: Our full year outlook for IET remains constructive for orders, revenue and
Nancy Beesey: Before turning to our outlook, I'd like to quickly speak to a part of our growth story that we think is a key differentiator for Baker Hughes. And as highlighted on slide 17, is the visibility we have around structural IET growth into the latter part of this decade. We believe this growth will drive meaningful free cash flow expansion for the company, which we can attribute to four areas. The first is LNG equipment orders.
Speaker 4: transcript
Speaker 4: For orders, we've increased our 2023 expectations from 11.5 to 12.5 billion dollars to a new range of 14 to 14.5.
For orders, we've increased our 2023 expectations from 11, five to $12 5 billion to a new range of $14 to $14 5 billion.
Speaker 4: transcript
Speaker 4: Lowing through the third quarter upside and fourth quarter guide, we now expect full year IET revenue between 10.05 and 10.35 billion dollars and EBITDA between 1.5 and 1.55.
Flowing through the third quarter upside in fourth quarter Guide, we now expect full year revenue between $10, five and $10 $35 billion in.
And EBITDA between one five and $1 55 billion.
Nancy Beesey: Based on our expectation, we will book almost $9 billion of LNG equipment orders across 2022 and 2022. 23. As a result, our gas tech equipment RPO is at a record level, giving IET strong equipment backlog coverage over the next few years. The second is gas tech services. As Lorenzo mentioned, we see the global LNG installed base growing by 70% from today through the end of this decade. Also, the 172 MTPA of capacity additions during the 2016 to 2022 time frame will begin to earn increasing service revenue over the medium term.
For OFC, we expect fourth quarter results to reflect the typical year end growth in international revenue and a decline in North America.
Speaker 4: transcript
Speaker 4: For OFSE, we expect fourth quarter results to reflect the typical year in growth in international revenue and in decline in North America. We therefore expect fourth quarter...
We therefore expect fourth quarter OFC revenue.
385% and $4 5 billion and EBITDA between 675% and $735 million.
Speaker 4: transcript
Speaker 4: $3.85 and $4.05 billion, and EVA DOB between $675 and $730.
Speaker 4: transcript
Speaker 4: Factors driving this range include the pacing of some international price.
Factors driving this range include the pacing of some international projects.
Speaker 4: transcript
Speaker 4: level of your in-product sales, SSPS backlog conversion, and the pace of our cost data.
<unk> of year end product sales Sps backlog conversion and the pace of our cost out initiatives.
Speaker 4: transcript
Speaker 4: After including the third quarter results in four quarter guidance, we now forecast full year OFSC revenue between $15.3 and $15.5 billion, and EVA DAW between $2.55 and $2.65.
After including the third quarter results and fourth quarter guidance, we now forecast full year <unk> revenue between $15 3 million and $15 5 billion.
Nancy Beesey: Given that Baker Hughes equipment is installed on the majority of these projects, we have significant earnings and returns visibility through 2030 and beyond from our gas tech services franchise. As LNG accounts for almost 80% of our 13.8 billion dollar RPO and gas tech services. The third growth area that we see is across industrial solutions and industrial products. We believe that these businesses can be so much more than the collection of technologies that they are today.
And EBITDA between two five and $2 65 billion.
We will provide detailed 2024 guidance alongside our fourth quarter results in January.
Speaker 4: transcript
Speaker 4: We will provide detailed 2024 guidance alongside our fourth quarter results and June .
Looking out to next year, we remain optimistic for continued growth across both OFC and <unk> as well as further operational enhancements to drive increasing margins and returns. We also remain focused on navigating aero derivative supply chain challenges and broader macroeconomic and geopolitical uncertainty as we head into 2020.
Speaker 4: transcript
Speaker 4: Looking out to next year, we remain optimistic for continued growth across both OFC and IE.
Speaker 4: transcript
Speaker 4: as well as further operational enhancements to drive increasing margins and reduce.
Speaker 4: transcript
Speaker 4: We also remain focused on navigating aeroderivative supply chain challenges and broader macroeconomic and geopolitical uncertainty as we head into 2024.
Nancy Beesey: For industrial solutions, the focus of this platform is to provide an integrated suite of solutions supporting industrial asset performance management and process optimization. There is a significant opportunity to advance solutions that can provide recurring revenue streams at accretive margin rates. The starting point for this is our coordinate platform, which we launched in January this year. In industrial products, we've been focusing on driving further simplification and unifying the industrial hardware capabilities that we have in our portfolio today. As we focus on industry verticals that allow for stronger growth opportunities and improve profitability into the future.
Sure.
More broadly our transformation journey continues and we're pleased with the progress we're making in identifying areas to drive efficiencies structurally removing costs and modernizing how the business operates.
Speaker 4: transcript
Speaker 4: And we're pleased with the progress we're making and identifying areas to drive efficiencies, structurally removing costs, and modernizing how the business up.
We are continuing to see the cost outperformance come through our operating results and we see further opportunities to enhance our operating performance through continued business transformation efforts.
Speaker 4: transcript
Speaker 4: We are continuing to see the cost-out performance come through our operating results, and we see further opportunities to enhance our operating performance through continued business.
Speaker 4: transcript
Speaker 4: In summary, we remain relentlessly focused on achieving the target.
In summary, we remained relentlessly focused on achieving the targets we've set for 20% EBITDA margins and now FSC in 2025, and <unk> in 2026, and we remain committed to delivering our ROIC targets of 15% per OFC and 20% for IEP.
Speaker 4: transcript
Speaker 4: 20% eva.m. margins in no FSC in 2025 and IET in 2020.
Nancy Beesey: The fourth growth area is new energy. We remain excited about new energy opportunities where we will focus on differentiated technologies that add value for our customers in CCUS, Hydrogen, Clean Power, Geothermal, and Emissions Management. Accordingly, we see a path to growing new energy orders from our $600 to $700 million target this year towards $6 to $7 billion in 2030.
Speaker 4: transcript
Speaker 4: And we remain committed to delivering our ROIC targets at 15% for OFC and
Speaker 4: transcript
Speaker 4: We are continuing to take actions today to help us achieve and exceed these targets. Overall, we remain excited about the future of Baker.
Importantly, we are continuing to take actions today to help us achieve and exceed these targets overall, we remain excited about the future of Baker Hughes.
Turn the call back over to Lorenzo.
Speaker 3: transcript
Speaker 3: Thank you, Nancy. As we enhance our position as a leading energy technology company, we remain encouraged about the continued growth that we see for our organization across our free time horizon.
Thank you Nancy as we enhance our position as a leading energy technology company. We remain encouraged about the continued growth that we see for our organization across our free time horizons.
Nancy Beesey: Next, I'd like to update you on our outlook for the two business segments, which is detailed on slide 18. Overall, we remain optimistic on the outlook for both OFC and IET, given strong growth tailwinds across each business, as well as continued operational enhancements to drive backlog execution and margin improvement. For Baker Hughes, we expect fourth quarter revenue to be between $6.7 and $7.1 billion, an EBITDA between $1.05 and $1.11 billion, and playing an EBITDA midpoint of $1.08 billion dollars.
Speaker 3: transcript
Speaker 3: While there is a growing consensus that the energy transition will likely take longer than many expected, our unique portfolio is set to benefit irrespective of how quickly the energy transition develops. For example, a faster energy transition drives quicker growth across our climate technology solutions.
There is a growing consensus that the energy transition will likely take longer than many expected.
Our unique portfolio is set to benefit irrespective of how quickly the energy transition develops.
For example, our foster energy transition drives quicker growth across our climate technology solutions business, while a slower energy transition would extend the cycle of our traditional oil and gas businesses.
Speaker 3: transcript
Speaker 3: While a slower energy transition would extend the cycle of our traditional oil and gas business.
Nancy Beesey: For the full year, we are increasing and narrowing our guidance ranges as we flow through third quarter results and fourth quarter guidance. Accordingly, we now expect 2023 Baker Hughes revenue to be between $25.4 and $25.8 billion, an EBITDA between $3.7 and $3.8 billion. For IET, we expect fourth quarter results to reflect sequential and year-over-year revenue growth for both gas tech and industrial tech. Therefore, we expect fourth quarter IET revenue between $2.8 and $3.1 billion, an EBITDA between $430 and $490 million. The major factors driving this range will be the pace of backlog conversion and gas tech equipment and the impact of any arrow-derivatives supply chain tightness and gas.
Speaker 3: transcript
Accordingly, we have set out our strategy to grow irrespective of the pace that the energy transition unfolds.
Speaker 3: transcript
Speaker 3: Considering this balance portfolio, fakies use is becoming less cyclical in nature and therefore set to experience solid growth irrespective of the energy transition pace.
Considering this balanced portfolio Baker Hughes is becoming less cyclical in nature, and therefore set to experienced solid growth irrespective of the energy transition pace in.
Speaker 3: transcript
Importantly, we are laying the foundation today for a more durable earnings and free cash flow growth profile, which will enable us in parallel to deliver best in class performance and structurally increasing shareholder returns.
With that I'll turn the call back over to Chase.
Thanks, Lorenzo operator, let's open the call for questions.
Ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone again, if you have any questions. Please press star one one.
Speaker 5: transcript
Speaker 5: Ladies and gentlemen, if you do have a question at this time, please press star 11 on your Peptone Telephone. Again, if you have any questions, please press star 11.
Nancy Beesey: Jessica. Our full-year outlook for IET remains constructive for orders, revenue, and EBITDA. For orders, we've increased our 2023 expectations from 11.5 to 12.5 billion dollars to a new range of 14 to 14.5 billion dollars. Lowing through the third quarter upside and fourth quarter guide, we now expect full-year IET revenue between $10.05 and $10.35 billion and EBITDA between $1.5 and $1.55 billion. For OFSE, we expect fourth quarter results to reflect the typical year-in growth in international revenue and in decline in North America.
Yeah.
Okay.
And our first question will come from Arun Jairam.
Speaker 5: transcript
Speaker 5: Sandhawks, first question. We'll come from Arun Jairan of Zaty Morgan. Your line has been...
JP Morgan your line is open.
Yeah. Good morning team Lorenzo I wanted to start with the I E.
Speaker 6: transcript
Speaker 6: Good morning team. Lorenzo, I wanted to start with the IET order outlook and guidance. Since the beginning of the year, Baker has raised.
Order outlook and guidance since the beginning of the year Baker has raised.
Speaker 6: transcript
Speaker 6: It's IET order guides by more than $3 billion. So, I was wondering if you could talk about some of the drivers of the higher inbound this year and just pop some 2024, because one of the questions is, are you taking some of the 2024 orders and accelerate the timing of that into this year?
IEP order guidance by more than $3 billion. So I was wondering if you could talk about some of the drivers of the higher.
Nancy Beesey: We therefore expect fourth quarter OFSE revenue between $3.85 and $4.05 billion and EBITDA between $675 and $735 million. After striving this range, include the pacing of some international projects, level of year-end product sales, SSPS backlog conversion, and the pace of our cost-out initiatives. After including the third quarter results and fourth quarter guidance, we now forecast full-year OFSE revenue between $15.3 and $15.5 billion and EBITDA between $2.55 and $2.65 billion.
Inbound this year and just thoughts on 2024.
Because one of the questions is it are you taking some of the 'twenty 'twenty four orders and accelerate the timing of that into this year.
Yes, definitely you Rune <unk>.
Good to hear from you and I think if you go back to the beginning of the year. We always said that we saw a robust pipeline of opportunities for IEP.
Speaker 3: transcript
Speaker 3: Good to hear from you and I think if you go back to the beginning of the year, we always said that we saw a robust pipeline of opportunities for IIT.
Speaker 3: transcript
Speaker 3: And as we've gone forward through the year, that has continued to get stronger and stronger. And more of the pipeline has been converting. And so it's given us the opportunity, really, to be able to take up our guidance on the IIT orders. And as you said, directly, you know, now it stands at a range of 14 billion to 14.5. And it really plays out in free areas as you look at the activity level.
And as we've gone forward through the year that has continued to get stronger and stronger and more of the pipeline has been converting and so it's given us the opportunity really to be able to take up our guidance on the <unk> orders and as you said correctly.
Nancy Beesey: We will provide detailed 2024 guidance alongside our fourth quarter results in January. Looking out to next year, we remain optimistic for continued growth across both OFSE and IET, as well as further operational enhancements to drive increasing margins and returns. We also remain focused on navigating aeroderivative supply chain challenges and broader macroeconomic and geopolitical uncertainty as we head into 2024. More broadly, our transformation journey continues, and we're pleased with the progress we're making in identifying areas to drive efficiencies, structurally removing costs, and modernizing how the business operates. We are continuing to see the cost-out performance come through our operating results, and we see further opportunities to enhance our operating performance through continued business transformation efforts.
Now it stands at a range of 14 billion to $14 five and it really plays out and free areas. As you look at the activity level the fast <unk> LNG.
Speaker 3: transcript
Speaker 3: The first is LNG. You've seen that LNG continues to be robust and there's been a number of projects that have moved forward. As you saw this quarter with the uptake of the venture global agreement also with the ad-not gas and the Rua facility. So continuing to see good uptake on the LNG side and we've booked $4.8 billion of LNG equipment orders.
<unk> seen that LNG continues to be robust and theres been a number of projects that have moved forward as you saw this quarter with the uptake of the venture Global agreement also with the AD Nat gas and the <unk> facility, so continuing to see.
Good uptake on the LNG side, and we booked $4 $8 billion of LNG equipment orders and we still expect more in the fourth quarter and very pleased to see also the uptake in the electrification and the electric motor being used from a brush division as well. So one is LNG the <unk>.
Speaker 3: transcript
Speaker 3: and we still expect more in the fourth quarter. And very pleased to see also the uptake in the electrification and the electric motor being used.
Nancy Beesey: In summary, we remain relentlessly focused on achieving the target sweep set. For 20% EBITDA margins in OFSE in 2025 and IET in 2026, and we remain committed to delivering our ROIC targets at 15% for OFSE and 20% for IET. Importantly, we are continuing to take actions today to help us achieve and exceed these targets. Overall, we remain excited about the future of Baker Hughes.
Speaker 3: transcript
Speaker 3: from our brush division as well. So one is LMG, the second.
Speaker 3: transcript
Speaker 3: You know, we continue to see strength in the unsure, offshore production.
We continued to see strength in the onshore offshore production and thats trending better than expected and we also expect to see a good fourth quarter with the larger F. BSO orders and that continuing to be a case with the offshore activity and the last area and new energy.
Speaker 3: transcript
Speaker 3: And that's trending better than expected and we also expect to see a good
Speaker 3: transcript
Speaker 3: fourth quarter with the larger FPSO orders and that continuing
Speaker 3: transcript
Speaker 3: be a case with the offshore activity. And the last area in new energy, you know, we had a forecast that the started the year to be at 400 million, we've taken it up to six to 700. And you can see that by the end of the third quarter, we're already at 540.
Lorenzo Simonelli: I'll turn the call back over to Lorenzo. Thank you, Nancy.
We.
Had a forecast at the started the year to be at $400 million, we've taken it up to 6% to 700 and you can see that by the end of the third quarter. We're already at 540, we still expect to see orders coming through in the fourth quarter. So feel good about that 6% to 700 million and still remain very confident on the.
Lorenzo Simonelli: As we enhance our position as a leading energy technology company, we remain encouraged about the continued growth that we see for our organization across our free time horizons. While there is a growing consensus that the energy transition will likely take longer than many expected, our unique portfolio is set to benefit irrespective of how quickly the energy transition develops. For example, a faster energy transition drives quicker growth across our climate technology solutions business, while a slower energy transition would extend the cycle of our traditional oil and gas businesses.
Speaker 3: transcript
Speaker 3: We still expect to see orders coming through in the fourth quarter. So feel good about that six to 700 million and still remain very confident on the
Lorenzo Simonelli: Accordingly, we have set out a strategy to grow irrespective of the pace that the energy transition unfolds. Fultz. Considering this balance portfolio, Baker Hughes is becoming less cyclical in nature and therefore set to experience solid growth irrespective of the energy transition pace.
Ended the decade being at the 6% to $7 billion. So good overall strength in those three areas from an <unk> perspective, and because we look out to 2024, we continue to see a pipeline of good project opportunities and we will obviously be able to update you further in January but.
Speaker 3: transcript
Speaker 3: end of the decade being at the six to seven billion so uh... good overall strength in those free areas from an i.e. perspective and
Speaker 3: transcript
Speaker 3: Look as we look out to 2024, we continue to see a pipeline of good project opportunities. And we'll obviously be able to update you further in January , but in the free cases, there's continued strength and a number of opportunities.
And the free cases, there's continued strength in a number of opportunities.
Great just a follow up.
Speaker 6: transcript
Speaker 6: Great. Just to follow up, you know, Lorenzo in the slide six, you give us a full sum update on LNG. But I was wondering if you could talk a little bit about the pipeline of opportunities that you see over the next 12 to 18 months. You know, brownfield versus greenfield, you know, US Gulf Coast versus International in a modular versus thick build. What are you seeing in terms of the emerging pipeline for Baker?
Lorenzo to slide six you can give us a fulsome update on LNG, but I was wondering if you could talk a little bit about the pipeline of opportunities that you see over the next 12 to 18 months.
Chase Mulvehill: Importantly, we are laying the foundation today for a more durable earnings and free cashflow growth profile, which will enable us, in parallel, to deliver besting class performance and structurally increasing shareholder returns. With that, I'll turn the call back over to Chase.
Brownfield versus Greenfield.
U S Gulf coast versus international in a modular versus stick build what are you seeing in terms of the emerging pipeline for Baker.
Chase Mulvehill: Thanks, Lorenzo.
Yes.
Speaker 3: transcript
Speaker 3: Yeah, it's definitely all of the above. And as you think about LNG and you think about also the role that natural gas is going to play as a transition and destination fuel, we see that we need an installed capacity of LNG by 2030 of 800 MTPA. We've mentioned that before. And as you look at 23, we've had a good
Operator: Operator, let's open the call for questions. Ladies and gentlemen, if you do have a question at this time, please press star 11 on your Capitone telephone. Again, if you have any questions, please press star 11.
Definitely all of the above.
You think about.
LNG and you think about also the role that natural gas is going to play as a transition and destination fuel.
We see that we need an installed capacity of LNG by 'twenty fatty of 800 Mg EPA, we've mentioned that before and as you look at 'twenty three we've had a good.
Arun Jayaram: And our first question will come from Arun Jayaram of Daisy Morgan, your line has been.
Speaker 3: transcript
Speaker 3: set of FIDs, there's 53 MTPA that's happened of FID. We've obviously booked ATMTPA because we do get some orders prior to projects going to FID. But we see that continuing as we go into 2024 and also feel good about 65 MTPA of FIDs in 24 and continuing in 25 and 26 at what we stated previously, the rate of 30 to 60 MTPA. And I think when you look at...
Set of <unk>, There's 53 MTA that's happened over Friday, we've obviously booked.
Lorenzo Simonelli: Good morning, team. Lorenzo, I wanted to start with the IET order outlook in guidance. Since the beginning of the year, Baker has raised its IET order guides by more than $3 billion. So I was wondering if you could talk about some of the drivers of the higher inbound this year, and just box on 2024, because one of the questions is, are you taking some of the 24 orders and accelerate the timing of that into this year?
ATM Tpa, because we do get some orders prior to projects going to RFID, but we see that continuing as we go into 2024 and also feel good about 65% <unk> in 'twenty four and continuing in 'twenty five 'twenty six at what we stated previously the rates at all.
Friday to 60 MTA in I think.
When you look at both Greenfield International North America Brownfield, we're seeing activity across the board I think obviously the U S has a unique opportunity where the natural gas reserves that it has and also the associated gas and a number of projects.
Speaker 3: transcript
Speaker 3: Greenfield International North America, Brownfield.
Speaker 3: transcript
Speaker 3: We're seeing activity across the board. I think obviously the US has a unique opportunity with the natural gas reserves that it has and also the associated gas and a number of projects, both Greenfield and Brownfield, Chenier, Venture Global have made comments about their activity. You know that there's some projects in Mexico. There's other new projects that, again, are working towards FID, such as
Lorenzo Simonelli: Yeah, definitely Arun. Good to hear from you. And I think if you go back to the beginning of the year, we always said that we saw a robust pipeline of opportunities for IET, and as we've gone forward through the year, that has continued to get stronger and stronger. And more of the pipeline has been converting. And so it's given us the opportunity really to be able to take up our guidance on the IET orders.
Both Greenfield and brownfield Cheniere venture global have made comments about their activity you know that there is some projects in Mexico.
Yes.
New projects that again <unk>.
Looking towards <unk>, such as to Lauren So U S continuing to be strong, but then also internationally you see Qatar you also see.
Speaker 3: transcript
Speaker 3: So US continuing to be strong, but then also internationally, you see Qatar, you also see, again, Canada, you see the ad nox of the world. And I think you're starting to emerge with Africa as well. So...
Lorenzo Simonelli: And as you said, directly, you know, now it stands at a range of 14 billion to 14.5. And it really plays out in three areas as you look at the activity level. The first is LNG. You've seen that LNG continues to be robust. And there's been a number of projects that have moved forward. As you saw, this quarter with the uptake of the venture global agreement also with the ad not gas and the Rua facility.
Again, Canada, you see the AD Nox of the World and I think you are starting to emerge with Africa as well. So we remain very positive and I think at the end of the day. It's all towards that 800, MTA that we need to have by 20 <unk> to make sure that we meet the energy demands of the world.
Speaker 3: transcript
Speaker 3: You know, we remain very positive. And I think at the end of the day, it's all towards that 800 MCPA that we need to have by 2030 to make sure that we meet the energy demands of the world. Great. Thanks, Lorenzo.
Great. Thanks Laurence.
Lorenzo Simonelli: So continuing to see good uptake on the LNG side. And, you know, we booked 4.8 billion dollars of LNG equipment orders. And we still expect more in the fourth quarter. And very pleased to see also the uptake in the electrification and the electric motor being used from our brush division as well. So one is LNG. The second, you know, we continue to see strength in the onshore offshore production. And that's trending better than expected.
Thanks.
Operator.
Justin.
Next question please.
Lorenzo Simonelli: And we also expect to see a good fourth quarter with the larger FPSO orders. And that continuing to be a case with the offshore activity. And the last area in new energy, you know, we had a forecast that the started the year to be at 400 million. We've taken it up to 6 to 700. And you can see that by the end of the third quarter, we're already at 540. We still expect to see orders coming through in the fourth quarter.
Lorenzo Simonelli: So feel good about that 6 to 700 million and still remain very confident on the end of the decade being at the 6 to 7 billion. So good overall strength in those free areas from an IT perspective. And look as we look out to 2024, we continue to see a pipeline of good project opportunities.
Lorenzo Simonelli: And we'll obviously be able to update you further in January. But in the free cases, there's continued strength and a number of opportunities.
Lorenzo Simonelli: Great, just to follow up, Lorenzo in the slide 6, you give us a full sum update on LNG. But I was wondering if you could talk a little bit about the pipeline of opportunities that you see over the next 12 to 18 months. Brownfield versus Greenfield, US Gulf Coast versus International, Modular versus Stick Build. What are you seeing in terms of the emerging pipeline for Baker? Yeah, it's definitely all of the above.
Lorenzo Simonelli: And as you think about LNG and you think about also the role that natural gas is going to play as a transition and destination fuel, we see that we need an installed capacity of LNG by 2030 of 800 MTPA. We've mentioned that before. And as you look at 23, we've had a good set of FIDs. There's 53 MTPA that's happened of FID. We've obviously booked ATM TPA because we do get some orders prior to projects going to FID.
Lorenzo Simonelli: But we see that continuing as we go into 2024 and also feel good about 65 MTPA of FIDs in 24 and continuing in 25 and 26 at what we stated previously the rate of 30 to 60 MTPA. And I think when you look at both Greenfield International North America, Brownfield, we're seeing activity across the board. I think obviously the US has a unique opportunity with the natural gas reserves that it has and also the associated gas and a number of projects.
Lorenzo Simonelli: Both Greenfield and Brownfield, Chenier, venture global have made comments about their activity. You know that there's some projects in Mexico. There's other new projects that again are working towards FID, such as Tolerian. So US continuing to be strong, but then also internationally, you see Qatar. You also see, again, Canada, you see the ad nox of the world. And I think you're starting to emerge with Africa as well. So, you know, we remain very positive. And I think at the end of the day, it's all towards that 800 MTPA that we need to have by 2030 to make sure that we meet the energy demands of the world.
Arun Jayaram: Great. Thanks, Lorenzo. Thanks. Operator.
Operator: Justin, next question, please.