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Baker Hughes Q3 Loss Narrower than Expected, Revenues Lag

Zacks Equity Research

Baker Hughes Inc. BHI reported third-quarter 2015 adjusted loss from continuing operations of 5 cents a share, which came better than the Zacks Consensus Estimate of 15 cents loss per share. The quarterly figure however deteriorated from the year-ago adjusted profit level of $1.02 a share.

The year-over-year decline stemmed from weakness in pricing, ongoing weakness in the U.S. onshore market, an unfavorable mix in the Gulf of Mexico and lower revenues.

Total revenue of $3,786 million declined from the year-ago level of $6,250 million and also missed the Zacks Consensus Estimate of $3,794 million.

Baker Hughes Inc. - Earnings Surprise | FindTheBest

Third-Quarter Segmental Highlights

Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 36%, 21%, 22% and 12%, respectively. The remainder was generated by the Industrial Services segment.

With respect to margins, North America recorded a loss before-tax margin of 12.4% (compared with profit before-tax margin of 12.0% in the year-earlier quarter) and the Industrial Services segment registered a pretax margin of 11.8% (versus 10.5%). Pretax margins at Europe/Africa/Russia/Caspian segment came in at 11.4% (versus 8.2% in the year-earlier quarter) and Middle East/Asia-Pacific region margin was 8.1% (versus 14.4%). Finally, Latin America registered pretax margin of 10.9% (versus 12.4% a year ago).

Liquidity

At the end of the third quarter, Baker Hughes had $2,043.0 million in cash and cash equivalents, while long-term debt was $3,896.0 million. In the reported quarter, capital expenditures totaled $178 million, down $80 million or 31% sequentially, and down $247 million or 58% from the third quarter of 2014. Depreciation and amortization expense was $432 million, relatively flat sequentially and down 5% from the prior-year quarter.

Zacks Rank & Other Stocks

Currently, Baker Hughes carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same space are Matrix Service Company MTRX, Natural Gas Services Group Inc. NGS and McDermott International Inc. MDR. While Matrix and Natural Gas Services sport a Zacks Rank #1 (Strong Buy), McDermott holds a Zacks Rank #2 (Buy).

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BAKER-HUGHES (BHI): Free Stock Analysis Report
 
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