Baker Hughes A GE Co (NYSE:BHGE) Q1 Earnings Beat Estimates Helped By Rising Oil prices

Baker Hughes A GE Co (NYSE:BHGE) reported first-quarter earnings that beat Wall Street estimates helped by a one-time tax benefit and an increase in oil prices. The oilfield services company controlled by General Electric Company (NYSE:GE) generated revenues of $5.4 billion in the quarter.

Q1 Financial Results

The company reported net income of $70 million or $0.17 share, more than double a net income of $31 million or $0.07 generated in the prior quarter. Earnings per share excluding one-time items stood at $0.09 a share, beating consensus estimates of $0.06 a share.

The earnings received a boost from a $124 million benefit from U.S tax reform. Adjusted operating income in the quarter stood at $228 million with free cash flow of $226 million.

Baker Hughes benefited from crude futures rising 7.5% in the quarter an improvement that helped it ramp oil and gas production.

“Market fundamentals remain supportive, as crude oil prices are relatively range bound, providing stability to customers as they evaluate projects. The gas market continues to grow, and strong LNG demand supports the view that new capacity will be required in the early to mid-part of the next decade,” said Baker Hughes Chief Executive Officer Lorenzo Simonelli in a statement.

Total orders in the quarter stood at $5.2 billion down 8% sequentially and 9% up year-over-year. The company ended the first quarter with a backlog of $22.2 billion a 6% increase from the fourth quarter. The increase was because of the adoption of a new revenue recognition accounting standard

Cash flows generated from operating activities stood at $294 million leading to a free cash flow of $226 million. Free cash flow also included $100 million of merger and restructuring-related cash payments. During the quarter, Baker Hughes repurchased $500 million worth of the company’s common stock, made up of $187 million of Class A shares and $313 million of class B shares.

Customer Wins

Baker Hughes secured big customer wins in the first quarter. For starters, the company closed an integrated win with Chrysaor, an independent E&P company in the U.K, to become its primary provider of oilfield services and equipment.

The company’s OFE business also solidified its leading position on being awarded a five-year contract for 100% of Kinder Morgan’s electric Submersible pump. The unit was also awarded a contract by Point Resources to provide ESPS for the Ringhorne development. In West Africa, the company was awarded a $100 million contract, with a major oil company for a large mature field.

According to the Chief Executive Officer, focus throughout the year will be on growing share in key markets including North America and the Middle East. In the oil field equipment segment, the company intends to provide customers with new commercial models and integrated offerings for better outcomes.

Baker Hughes also plans to expand its leading technology portfolio to drive down total development costs in the quarter. In the Digital Solutions Segment, the company is increasingly gaining traction with customers on digital offerings as the controls business also continues to strengthen its position as a technology leader.

During the First quarter, Baker Hughes entered into a partnership agreement with NVIDIA Corporation (NASDAQ:NVDA) to expand its capabilities in image recognition and artificial intelligence.