Baker Hughes, a GE company Announces First Quarter 2019 Results

• Orders of $5.7 billion for the quarter, down 17% sequentially and
  up 9% year-over-year
• Revenue of $5.6 billion for the quarter, down 10% sequentially and
  up 4% year-over-year
• GAAP operating income of $176 million for the quarter, decreased
  $206 million sequentially and increased $217 million year-over-year
• Adjusted operating income (a non-GAAP measure) of $273 million for
  the quarter, down 45% sequentially and up 20% year-over-year*
• GAAP diluted earnings per share of $0.06 for the quarter which
  included $0.09 per share of adjusting items. Adjusted diluted earnings
  per share (a non-GAAP measure) were $0.15*
• Cash flows used from operating activities were $(184) million for
  the quarter. Free cash flow (a non-GAAP measure) for the quarter was
  $(419) million*

^{*The Company presents its financial results in accordance
with GAAP. However, management believes that using additional non-GAAP
measures will enhance the evaluation of the profitability of the Company
and its ongoing operations. Please see Tables 1a, 1b and 1c for a
reconciliation of GAAP to non-GAAP financial measures.}

LONDON & HOUSTON–(BUSINESS WIRE)–Baker Hughes, a GE company (NYSE: BHGE) (“BHGE” or the “Company”)
announced results today for the first quarter of 2019.

^{*These are non-GAAP financial measures. See section entitled
“Charges and Credits” for a reconciliation from GAAP.}

^{“F” is used in most instances when variance is above 100%.
Additionally, “U” is used in most instances when variance is below
(100)%.}

“BHGE delivered a solid first quarter against a backdrop of stabilizing
global oil and gas markets. U.S. rig count dropped slightly less than
expected, and international activity remained steady. The LNG market is
very active. While the speed of the recovery varies across these
markets, we see our Company positioned to benefit from multiple growth
drivers,” said Lorenzo Simonelli, BHGE Chairman and Chief Executive
Officer.

“In the first quarter, we booked $5.7 billion in orders, driven by
year-over-year growth in three of our four segments. We delivered $5.6
billion in revenue and adjusted operating income in the quarter was $273
million.

“In Oilfield Services (OFS), we saw typical seasonal declines in volume
sequentially, and strong year-over-year growth across all product lines.
In the quarter, we continued to execute in our core well construction
product lines, and re-entered a number of markets globally by securing
large, multi-year awards from customers. We remain focused on re-gaining
profitable share in critical markets and improving margins.

“In Oilfield Equipment (OFE), we delivered another strong orders
quarter, winning major contract awards across a number of subsea
projects. Our new approach to subsea development, Subsea Connect,
continues to gain traction with customers and was central in our wins
with BP on their Tortue project and Beach Energy. We continue to
leverage early customer engagement, modular technology and life-of-field
planning to lower cost and improve cycle times.

“Our Turbomachinery & Process Solutions (TPS) segment saw continued
activity in the LNG market, with further progress on several major
projects. In the first quarter, we secured contract awards to provide
turbomachinery equipment for the Golden Pass LNG export facility and
BP’s Tortue Floating LNG project. We remain at the forefront of
technology and solutions for the LNG market and are well positioned as
new projects are sanctioned.

“In Digital Solutions (DS), we continue to drive growth with customers
across end markets such as electronics, automotive, aviation and
additive manufacturing. We are leveraging the strength of our
measurement, sensing, and inspection technology portfolios to launch new
products for our customers.

“In summary, we have a positive outlook across a number of end markets.
Strengthening international markets will have the largest positive
impact on our business, while operators in North America will
continually re-evaluate their spending plans. The next wave of LNG
projects will be positive for us, and we continue to see encouraging
signs in the offshore market,” concluded Simonelli.

Quarter Highlights

Customer Wins

BHGE’s OFS segment secured a large, multi-year wireline contract with
Petrobras to provide services for a large portion of the customer’s
shallow and deepwater wells offshore Brazil, re-entering the market
after several years.

The OFS team also won a number of significant Drilling and Completion
Fluids (DCF) contracts in Asia Pacific, North America, and the Middle
East, displacing competitors and driving growth for BHGE. In Malaysia,
OFS won the first DCF award in the country after almost five years. In
North America, OFS won its first significant drilling fluids award in
the Permian in several years. In Kuwait, OFS took the leading DCF
position in the country.

During the quarter, BHGE’s new Subsea Connect strategy led to a number
of important contract wins in the OFE business. Together with McDermott,
BHGE will provide subsea umbilicals, risers and flowlines and subsea
production system equipment for BP’s Greater Tortue Ahmeyim natural gas
project. The award follows 12 months of close collaboration and
co-location among the teams to define the right approach, technology and
equipment for the project. The companies will continue to work closely
to drive efficiencies and reduce lead times.

OFE was also awarded a subsea production contract by Beach Energy for
the Otway Project, a natural gas field offshore South Australia. BHGE
will provide seven medium-water horizontal trees, seven associated
subsea control systems, and seven wellheads. The project will utilize a
combination of global and local teams, building on BHGE’s strong
presence and experience in Australia.

In the quarter, TPS secured an award to provide turbomachinery equipment
for ExxonMobil and Qatar Petroleum’s 16 MTPA Golden Pass LNG export
facility. BHGE will provide six heavy-duty Frame 7 gas turbines driving
12 centrifugal compressors for the plant. The gas turbine technology
BHGE is deploying is the most utilized large industrial gas turbine in
the LNG market, with almost 80 units in operation in 13 countries.

Also during the quarter, the TPS team won an award to provide
turbocompressor technology for the 2.5 MTPA BP Tortue FLNG project. The
Company will provide PGT25+G4 aeroderivative gas turbine-technology for
four compressor trains. This solution is well proven in similar FLNG
applications, achieving best-in-class reliability and availability
rates. This award, together with the subsea win on the Tortue project,
demonstrates the strength and breadth of the Company’s fullstream
portfolio for offshore gas fields.

TPS also made progress in its on- and offshore production segment,
securing a key win in Saudi Arabia for the Berri Oilfield located off
the eastern coast of Ras Tanura. TPS will provide four high-efficiency
electric motor driven compression trains. Once completed, the project
will be capable of producing an additional 250,000 barrels of crude oil
per day. This demonstrates BHGE’s commitment to Saudi Arabia’s IKTVA
program, driving local development and economic growth across the
kingdom.

During the quarter, Frost and Sullivan recognized DS’ Industrial
Inspection business as the global market leader in industrial CT
applications in 2018.

Technology & Innovation

Also in the quarter, BHGE’s OFS business opened a new Motors Center of
Excellence in Oklahoma City, bringing innovation, manufacturing and
repair and maintenance activities closer to customers. The center’s
location will enable shorter turnaround times, lower shipping costs and
improved margins.

TPS was selected by KBR to provide turbomachinery technology for KBR’s
standardized mid-scale LNG design. The design will feature BHGE’s
LM2500+G5 and LM6000PF gas turbines, which will provide ideal power
ratings, speed and power flexibility, long maintenance intervals, and
industry leading efficiencies for KBR-designed facilities. This
partnership builds on the companies’ well-established 40-year history
and partnership successfully delivering LNG projects.

The DS segment introduced Lumen, a ground- and drone-based advanced
methane detection and reduction system. Using advanced data analysis,
this technology provides methane concentration data to customers in real
time, helping reduce emissions and increase safety.

Executing for Customers

BHGE’s latest line of drilling motors is helping operators drill faster
and longer laterals in the Permian Basin. In the first quarter, a
customer used BHGE’s Navi-Drill Duramax motor to drill 7,652 ft in 80
drilling hours, a 30% rate-of-penetration (ROP) improvement versus the
offset well, saving the customer three days in rig time. The system has
drilled 41 runs to date with ROP improvements averaging between 25-40%
versus offset wells.

OFS’ leading drilling portfolio continues to deliver strong performance
in challenging drilling environments globally. In the Gulf of Mexico, a
customer deployed BHGE’s AutoTrak™ rotary steerable system to drill the
longest slim hole side track in the region after an incumbent could not
execute the scope of work required. In Asia Pacific, BHGE’s
comprehensive drilling solution delivered a complex horizontal section
for a customer in the Weiyuan Shale in under 10 days, a new record for
the basin.

Orders for the quarter were $5,693 million, down 17% sequentially and up
9% year-over-year. The sequential decrease was a result of seasonality
in all product companies.

Year-over-year, the orders growth was driven by Oilfield Equipment,
Oilfield Services, and Digital Solutions, partially offset by a decline
in Turbomachinery and Process Solutions orders. Year-over-year equipment
orders were up 17% and service orders were up 4%.

The Company’s total book-to-bill ratio in the quarter was 1.0; the
equipment book-to-bill ratio in the quarter was 1.0.

Remaining Performance Obligations (RPO) in the first quarter ended at
$20.5 billion, a decrease of $0.5 billion from the fourth quarter of
2018. Equipment RPO was $5.5 billion, down 5% sequentially. Services RPO
was $15.0 billion, down 1% sequentially.

Revenue for the quarter was $5,615 million, a decline of 10%,
sequentially. The decline was driven primarily by seasonality across
most businesses. Turbomachinery and Process Solutions was down 27%,
Digital Solutions was down 14%, and Oilfield Services was down 3%,
partially offset with Oilfield Equipment up 1%.

Compared to the same quarter last year, revenue was up 4%. Oilfield
Services was up 12%, Oilfield Equipment was up 11%, partially offset
with Turbomachinery & Process Solutions down 11%, and Digital Solutions
down 1%.

^{**Non-GAAP measure (see Table 1a in the section entitled
“Charges and Credits” for a reconciliation from GAAP).}

^{“F” is used in most instances when variance is above 100%.
Additionally, “U” is used in most instances when variance is below
(100)%.}

On a GAAP basis, operating income for the first quarter of 2019 was $176
million. Operating income declined $206 million sequentially and
increased $217 million year-over-year. Total segment operating income
was $373 million for the first quarter of 2019, down 39% sequentially
and up 14% year-over-year.

Adjusted operating income (a non-GAAP measure) for the first quarter of
2019 was $273 million, which excludes adjustments totaling $97 million
before tax, mainly related to restructuring charges and separation and
merger related costs. A complete list of the adjusting items and
associated reconciliation from GAAP has been provided in Table 1a in the
section entitled “Charges and Credits.” Adjusted operating income for
the first quarter was down 45% sequentially, driven primarily by lower
volume in Turbomachinery & Process Solutions and Digital Solutions.
Adjusted operating income was up 20% year-over-year driven by increased
volume and productivity.

Depreciation and amortization for the first quarter of 2019 was $350
million.

Corporate costs were $100 million in the first quarter of 2019, down 9%
sequentially and up 2% year-over-year.

Other Financial Items

Income tax expense in the first quarter of 2019 was $67 million.

GAAP diluted earnings per share were $0.06. Adjusted diluted earnings
per share were $0.15. Excluded from adjusted diluted earnings per share
were all items listed in Table 1a in the section entitled “Charges and
Credits” as well as the “other adjustments (non-operating)” found in
Table 1b.

Cash flows from operating activities were $(184) million for the first
quarter of 2019. Free cash flow (a non-GAAP measure) for the quarter was
$(419) million. A reconciliation from GAAP has been provided in Table 1c
in the section entitled “Charges and Credits.”

Capital expenditures, net of proceeds from disposal of assets, were $235
million for the first quarter of 2019.

Results by Reporting Segment

The following segment discussions and variance explanations are
intended to reflect management’s view of the relevant comparisons of
financial results on a sequential or year-over-year basis, depending on
the business dynamics of the reporting segments.

Oilfield Services (OFS) revenue of $2,986 million for the first quarter
declined by $77 million, or 3%, sequentially.

North America revenue was $1,156 million, down 6% sequentially.
International revenue was $1,830 million, flat sequentially, driven by
increases in the Middle East and Sub-saharan Africa, offset by declines
in Europe and Asia. From a product line perspective, the sequential
decrease of 3% in OFS was driven primarily by Completions, Pressure
Pumping, and Artificial Lift.

Segment operating income before tax for the quarter was $176 million,
down $48 million, or 22%, sequentially, primarily driven by lower volume
and decreased cost productivity.

Oilfield Equipment (OFE) orders were up $267 million, or 54%,
year-over-year, driven primarily by higher equipment order intake.
Equipment orders were up over 82% driven by higher order volume in the
Subsea Production Systems business. Service orders were up 21% primarily
driven by higher order intake in the Subsea Services business.

OFE revenue of $735 million for the quarter increased $71 million, or
11%, year-over-year. The increase was driven by higher volume in the
Subsea Production Systems business, Subsea Services business, and Subsea
Drilling Systems business. These increases were partially offset by
lower volume in the Flexible Pipe business.

Segment operating income before tax for the quarter was $12 million, up
$18 million year-over-year. The increase was driven by higher volume and
better cost productivity.

Turbomachinery & Process Solutions (TPS) orders were down 12%
year-over-year. Equipment orders were down 14% driven by lower equipment
installations. Service orders were down 12% driven primarily by lower
upgrades, partially offset by higher transactional services orders.

TPS revenue of $1,302 million for the quarter decreased 11%,
year-over-year. The decrease was driven by lower equipment installation
volume, lower services upgrades, and the sale of the Natural Gas
Solutions business, partially offset by higher contractual services
revenue. Equipment revenue in the quarter represented 35% of total
segment revenue, and Service revenue represented 65% of total segment
revenue.

Segment operating income before tax for the quarter was $118 million,
down 1% year-over-year. The decrease was driven primarily by lower
volume, and the sale of the Natural Gas Solutions business, partially
offset with higher cost productivity.

Digital Solutions (DS) orders were up 2% year-over-year, driven
primarily by higher order intake in the Bently, Inspection Technologies
and Measurement & Sensing businesses.

DS revenue of $592 million for the quarter decreased 1% year-over-year,
mainly driven by the lower volume in the Controls and Software
businesses, partially offset by higher volume in the Measurement &
Sensing and Pipeline & Process Solutions businesses.

Segment operating income before tax for the quarter was $68 million,
down 6% year-over-year. The decrease year-over-year was primarily driven
by unfavorable product mix.

^{*Certain columns and rows may not sum up due to the use of rounded
numbers.}

Contacts

Investor Contact:
Philipp Mueller, +1 281 809 9088, [email protected]

Media Contact:
Stephanie Cathcart, +1 202 549 6462, [email protected]
Melanie
Kania, +1 713 439 8303, [email protected]

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