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Baker Hughes Beats Q3 Earnings, Revs

Zacks Equity Research

Baker Hughes Inc. (BHI), one of the largest oilfield service companies in the world, reported strong third-quarter 2013 results owing to impressive operating performances from its Middle East/Asia-Pacific and Europe/Africa/Russia Caspian business units.

Adjusted earnings (excluding severance charges related to restructuring in Latin America) came in at 81 cents a share, surpassing the Zacks Consensus Estimate of 78 cents. The quarterly figure also increased 2.5% from the year-ago adjusted 79 cents per share.

Total revenue of $5,787.0 million increased 8.1% from the year-ago level of $5,355.0 million. The top line also surpassed the Zacks Consensus Estimate of $5,745.0 million.

Second Quarter Segmental Highlights

Of the total quarterly revenue, North America, Europe/Africa/Russia Caspian, Middle East/Asia-Pacific and Latin America accounted for 49.3%, 17.0%, 18.4% and 9.6%, respectively. The remainder was generated by the Industrial Services segment.

An improvement in before-tax profit was noticed only in the Middle East/Asia-Pacific and Europe/Africa/Russia Caspian regions. The Middle East/Asia-Pacific region recorded a profit before-tax margin of 15.0% versus 9.0% in the year-ago quarter. While the Europe/Africa/Russia Caspian region posted profit before-tax margin of 17.0% against 13% in the previous year.

All other segments registered lackluster pre-tax margins, with the North America region coming in at 10.0% (compared with 12.0% in the year-earlier quarter). Pre-tax margins at the Latin America segment came in at negative 1.0% (versus 9.0% in the year-earlier quarter) and at the Industrial Services segment stood at 12.0% (versus 13.0% in the year-ago quarter).


At the end of the third quarter, Baker Hughes had $1,368.0 million in cash and cash equivalents, while long-term debt was $3,838.0 million, representing a debt-to-capitalization ratio of 20.3%. Baker Hughes' capital expenditures were $511.0 million in the quarter.  

Zacks Rating

Baker Hughes retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at oil field services firms like Core Laboratories NV (CLB), Exterran Holdings Inc. (EXH) and Schlumberger Ltd (SLB) that offer better prospects. All the stocks sport a Zacks Rank #2 (Buy).

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