Baker Hughes (BKR) 23 Jan 232022 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Baker Hughes Company Fourth Quarter and Full Year 2022 Earnings Call [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Jud Bailey, Vice President of Investor Relations. Sir, you may begin.

you. Thank and Call. Baker everyone, XXXX Fourth to Conference Earnings welcome morning, Hughes the Quarter Good

me our release with Web CFO, today Here are be site Nancy and Lorenzo can Buese. our at Simonelli; bakerhughes.com. The on earnings found we earlier Chairman issued our and CEO,

filings As during of review performance future and materially. of a number the Web this will Please call, we and of a forward-looking not statements. a cause SEC the guarantees and for reminder, risks our assumptions. that provide factors differ These actual course discussion conference statements site are involve to results of could

you As in of found our other and earnings release. GAAP income to know, measures be reconciliations non-GAAP can operating

With the will that, I turn call Lorenzo. to over

Good I'd everyone, joining earnings highlighting morning, off by call. for thanks like couple start Jud. of for us. a and Thank changes this to you,

week will customers at where time, Meeting. Board meeting For Florence, from the our hosting this Italy, welcome call first our next host week our industry earnings experts and we over we Annual are later and X,XXX

course during our will been we webcast, using the be reference a this also that on presentation site over our which published has remarks. investor We prepared Web will also of

organization, two segments. off our key fundamentally restructuring step executive way forward of changes, Hughes will improve Baker Strategically, fronts. X, Slide our as OFSE and the the important for In segment large resegmentation management end our XXXX a company two including on effort for in was continued a year we in end number awards markets. of Baker the company Hughes improvement of a the transformation saw which orders see level across margin IET, by were across kicked solid multiple an business fourth operates. business took and can on momentum reshaping you extremely very pleased to segments. which This we was with As major different formal XXXX the across announced quarter, strong we driven into we an

was year Operationally, mixed. our the performance for

of organization as well we first multiple the of year, headwinds half experienced During this as number challenges. operational a across our

in performance initiatives orders focused shorter our and term improved improve to performance over new equipment the in we term new half, and XXXX, various billion conference growth meet are laid highs to energy Commercially, are in strong $X.X on do booked investor work financial highest hit we still and to new energy the showing $XXX out While and orders, execution million have poised we over over in XXXX. objectives orders, at LNG remain XXXX. into an second September. almost booked longer and XX% our LNG more ever In versus

previous back $X SSPS Within in representing onshore/offshore recorded historical in Although equipment production orders over to growth XXXX, XX% also our orders exposed booked levels, offshore almost businesses OFSE, in accelerated. XXXX. orders XXXX. $X.X not billion yet for versus billion IET, of In

$X.X up We our industrial X% in are industrial with year-over-year. billion seeing in segments technology of orders XXXX, improvements also

OFSE both XXXX, what look macro order be mixed IET and momentum is a across we to ahead to to expect continue likely As we despite environment.

geopolitical recessionary we X. maintain of future the Turning oil weight tightening positive inflationary expected the pressures Slide challenges some meet years likely investment for forecasted of to under require conditions. spare monetary With XXXX, of factors, largest economies, economy now by to and capacity and outlook to under-investments world's for the recent the years growth global global demand. experience has will In deteriorated Despite gas being and in is amplified of energy a sector. pressures some

in year the believe are a consecutive spending activity digit of poised global to in a we are and to For increases early this see of in reason, second XXXX. upstream in stages multiyear global solid that continue double we upturn

addition and in that US new in believe in new the In in beyond. Reduction Europe the legislation Inflation strong XXXX and growth and Act also in growth oil potential energy opportunities we traditional spending will gas to support significant

tight. world also with lower cycle. outlook positive of prospects the gas coal. gas role and that and a natural supplies and remain will of in refill for term need China, for displace emissions likely we structural LNG long on term term, the and LNG Near near the growth reopening the natural play on term, the We we critical storage gas to keeping Longer the looks global to LNG believe optimistic investment remain and consumption markets Europe's combined gas as

LNG inflation the rates number cost are XXXX, fronts. a we of interest progress and FIDs slowed While new higher pace seeing in on of

in growth levels with significant expect to continue elevated project new XXXX sanctions XXXX. likely in continuing We into activity

XX we MTPA projects of MTPA LNG of XX FIDs Following in in to an continue to XXXX. see LNG XXXX XXX to expect additional FID reach

are Just outlook number into for are several is the extend to more opportunities we developing that that of advancements now brownfield important seeing gaining the the a term new Most and visibility initiatives on our likely middle the of in concept we progress decade. as modular of as project LNG current activity years. orders, towards wave notably, near are new

Slide to Turning X.

in is to Hughes shareholders. on macro order future focused intensely this for in four drive areas Given XXXX backdrop, value Baker key

growth energy. segments. opportunities are business well IET, most both significant in the reach building opportunities that entire production on LNG, These across notably are in onshore/offshore we as to portfolio OFSE First, new as and well across positioned capitalize the

Second, margin profile. optimizing we remain in our structure and corporate the to returns Baker organization on transforming our Hughes improvements focused and drive

OFSE the While The process, million changes end cost well structural of and the capital we invested to our and confident and undertaking of IET $XXX in of XXXX as stages simplify return next increasingly XX% respectively. will will operational enhance hitting organization least OFSE integration as at early over cost the out in out efficiency. we months two are and driving margin years, still the by initiatives a delivering XX% are to that and the target role of this XX and in are XX% in next we over on XX of for play IET, EBITDA our three key

to develop our technologies. acquiring capture, technologies years particularly continue investing carbon power few We've geothermal. over multiple been around energy and last hydrogen, and the we clean new portfolio new in of Third, active

Met are on We the focus now the our existing portfolio. and transitioning impact more towards achieve energy enable to a technologies potential incubation will with full This Mosaic. portfolio commercial of particular new like Power high its

all also buybacks XXXX, and generating we shareholders XXXX. increased to In XX% continue of while will we to and of XX% a time combination dividend focus dividends. our the share first returning this initiatives Finally, to these on flow free cash for and strong since through

continuing continue our is to forward, with Going to IET structural grow goal increase the the experiences an as dividend growth in earnings. broader emphasis shareholder on business returns revenue to and

segments. Equipment, America Turning provide markets, and on Services each to promising our levels activity outlook of In Slide of and shifting Oilfield update an international while with favor remains growth trends the offshore off. North I'll X. more in

to and opportunities current oil Africa, the given team remains continues environment West our and and countries In across current solutions, America to saw our execute for the our offshore America, and outlook well improvement. normalizes. gas completions drilling portfolio supply our diverse driven of continue portfolio. several Within strong visibility throughout chemicals favorable. multiple opportunities we retains as product countries improvement over construction remains continues our activity chain production by year portfolio profitability and have scheduled the generally with seen and price pricing and this course activity supply and activity in growth across see to the margin Middle the growth Importantly, constraints range as growth Latin for bound In volume East year. North next to creating is lines, In solid where expect increase in environment year from the well moderate XXXX. business driving promising chain Geographically, and SIM, most ease levels pressures we OFSE the strong likely limited in

further plant to levels levels expect our chemicals normalize fully our improvement operational. margin we as in XXXX, Singapore becomes business back historical and For

for well executed activity to and fourth pick SSPS, to the were order margins achieve pleased in offshore In activity normalizing quarter them continues strong impact Russia. XX.X% OFS legacy when we up. the remains Our EBITDA and as XX% segment see of

saw we expect orders, both fourth subsea the in After increase in and in as traction in awards. strong XXXX subsea order quarter. we flexibles year flexibles trees in another XXXX in good a a Importantly, trees record significant as year well

as savings make integrating the cost also systems. will into into restructuring the progress production finalizing rationalize segment gained We continue a Maria returns. capacity profitability drive team review will of are layers approximately XXXX. be management well After in to manufacturing removing as in subsea to to to and her business and the Claudia largely XX% addition SSPS better to the our business, thorough OFSE plans of SSPS These steps from come effect and XX% on in

For double increases markets. we cost our most to improvements program expect inflationary pricing as growth multiple XXXX, and remains favorable OFSE activity solid we in execute revenue margins subside digit in pressures out in and deliver regions, and key

of IET and franchise. forgings. gas awards the fourth parts onshore/offshore to fourth boards Operationally, by the technology well the challenges engines, services class world the chips Gastech chain, and continues driven different castings production. of depth LNG, multiple our circuit to illustrates challenges for continued awards Moving LNG and saw this portfolio. we In progress in supply from as navigate IET, the ranging breadth generated and in to gas as in multiple quarter Orders record quarter in orders during across

for another the second contract terminal This for quarter During award XXXX, almost IET first this part XX awarded CalcaShoePass basis. an different booked MTPA production, Venture XXXX of provide award follows agreement. supply major contracts Power in all third an similar phase in onshore/offshore Latin worth combined of and of the first In for of another and the XXXX pleased to Island a million builds of to project. for system Plaquemines $XXX are Global's VG's on Sub-Saharan in an projects master Africa quarter which we five Furthermore, a be the on phase order for order quarter, were system. LNG America Plaquemines in a the

of two With power sizes. trains pumps compressors and more that maintains these compression various turbines, turbines leadership generation aero-derivative and gas providing in by FPSO totals systems, XX than IET XX market awards, its steam the

the to in COX by Sarawak, significant and two offshore to the On in and to as Carigali the project advanced reinjecting technology our trains dedicated with separation project world's we is for to inspection well front, offshore achieved X.X will in in business two continued to Marine a this industrial for carbon recovering pleased compression we emissions COX MTPA. were Heavy customers enable business, book In aviation order from facility ultrasonic number across wins booster sequestration quarter capture supply Latin an well Pacific. our site. The systems different CCS pressure gears. Engineering through trains of into as a with a perform industry, largest separated Baker Orders membrane deliver pumps, compressors technology the traction low for to inspection Hughes removal services COX well reduce orders capacity commercial be COX as America storage and energy in region to testing valves inspection Malaysia. with Asia new record PETRONAS' equipment Malaysia strong expected including of as visual deal and

volume industrial some tech we our solid monitoring in to improvement condition and margin in businesses, addition and see operational inspection. pleased were to In signs growth by in orders, led of increases

positive into recovers. as issues XXXX convertibility expect start supply abate the chip We chain shortage momentum and backlog and continue to this to

chain are pipeline in has of of record in As IET to backlog new billion. both a closely for IET orders $XX.X monitoring we billion and between new we $XX.X we opportunities energy, the LNG, a Despite industrial supply robust billion and $XX order expect and XXXX, enter tech. XXXX Gastech onshore/offshore and now challenges,

this We help to are on and revenue significant to positioned XXXX drive execute XXXX. well backlog in growth

the to a organization. number for unique pivotal strategically Baker was a some changes and it also accelerated in year of XXXX us While challenges Hughes, presented

principles focus I look Hughes the diversity, financial as needs spending goals customers' this engineering improving returns well its across positioning depth our capitalize to are its confident landscape. changing and focused new entire as scale the Achieving well investment executing to and structural talent. are energy feel opportunities. of Baker cycle, at a is adapt in and these XXXX organization ability The and inclusiveness and its require significantly in changes on and acute meeting company global we Across we in As quickly as will entire as change. beyond, the unique and energy multiyear enterprise, resources the the of on of and culture is the its in our margins acceleration wave unfolding our to upstream LNG

the margin and team Our laid to focused transforming have forward, and help on we out operate shareholder targets is best-in-class return returns. taking drive way energy we achieving value the and

call to With over Nancy. turn the I'll that,

$XX.X forward Lorenzo. our orders the and billion, at Remaining an We're the company and strong increase $XX.X were sequentially. Year-over-year, XXXX. Oilfield the industrial company Thanks, billion, Total moving the the with technology, both by billion, X% at business in capital billion, performance XX% X orders overview I XX% XX%, then flow quarter. IET begin $X.X of outlook. XX% versus billion, up $X will balance company while into Total at XX% were energy XXXX. were for of sequentially, the up Services extremely RPO RPO sequentially. was up orders then prior segment Equipment orders ended driven were full pleased year up $XX.X on and during obligation discuss orders increase OFSE flat sequentially. by versus performance results an Slide following quarter with and orders cash up sheet, ended and before XX% details up free IET an our throughout sequentially allocation quarter, driven for total segments.

X.X. and X.X book-to-bill the in company total for quarter Our company IET ratio IET was was book-to-bill was the X.X. X.X was and year Total

income increases XX% X% in Operating segments. excludes and billion, was was million sequentially the income for $XXX million. for restructuring, sequentially XX% by both impairment year-over-year, up Adjusted up and other up Revenue driven $XXX operating $XX $X.X quarter was was income Adjusted operating the million, XX% year-over-year. and which up of quarter charges.

Adjusted sequentially quarter, adjusted and XX%, up Our sequentially year-over-year. of basis efforts. was our XX% corporate was the XXX in rate points $XXX points adjusted $XXX the XX income basis million, up Year-over-year, rate Adjusted by was realization was for points the points. driven and up the XXX XX.X%, costs some our operating Corporate EBITDA basis were up income of in XX% EBITDA quarter up XXX sequentially. optimization quarter rate operating basis year-over-year. million up

expect corporate quarter. amortization roughly compared For the quarter and first was Depreciation in the we costs fourth million be to quarter, to expense levels. flat $XXX

tax and Net $XX remain in in earnings and for GAAP was For fourth quarter, million. quarter tax the quarter unrealized expect nonoperating $X.XX. Also share of flat Adjusted These was expense of were matters General million recorded respectively. included $XX was mark-to-market value AI of we to the in $XX first the all million, earnings per $XXX Electric. with expense GAAP related share investments D&A drilling other was the net levels. were termination interest with $X.XX. loss. to fair million. Income $XX losses ADNOC Included CX million per in charges share earnings are and agreement per

a is maintain free $X.X times debt debt the months million, in of net of adjusted X.X We higher of strong cash $XXX by which billion and up trailing balance $X.X We EBITDA. sheet XX. Slide EBITDA driven XX to billion, collections. flow strong $XXX adjusted cash million and generated total our sequentially, Turning with quarter

quarter, by to decline cash For driven seasonality. the flow we sequentially, first expect free primarily

basis cycle be XX% from a mid target XX% continue to will cash conversion low through to but EBITDA on adjusted the in to XXXX free flow We expect range.

$X.XX per an repurchased for XX Class share $X.XX share. capital price of million increased the We during A quarterly to X.X per million shares and dividend $XXX average fourth $XX also Turning quarter at Slide and our allocation. by to

shareholders. year XXXX, we of $X.X the a total billion For to returned full

the Quest Power we total and acquisition on quarter, Generation, we announced transactions, Integrity of Access Brush these recently cash net fund and hand. of million. paid for the took To balance strong sheet $XXX our The approximately closed used three advantage ESP. was these During transactions cash

returning allocation growth that investing cash policy flexible Hughes committed Baker to capital balances shareholders and a to opportunities. remains in

starts a priority basis. Hughes on adjusted XX% cash allocation the in from enable sheet also balance XX% to philosophy cycle EBITDA of of through flow to can a capital with our framework in and current IET will invest return targeting This maintaining efforts conversion Baker excess Our to free to cash us flow will bolt-on portfolios OFSE as complement the back new allow free our of that M&A in XX% shareholders. as opportunities This and energy. well strong

dividend and opportunities we this given shareholders, the for growing look to will prioritize As growth our to regular IET return complementing opportunistic with share repurchases. cash secular we

forward. and increase going Services year-over-year, the on in I regions. up surface X% million, Latin in X%, sequentially increases Slide were down X%. in Now the quarter sequentially. up CIS, Oilfield subsea up multiple were up Orders all Europe, results and America XX% Middle across XX% revenue with $X.X orders driven an tree you increased driven outlook flat X% by Asia revenue awards quarter system business billion, in through the International on America give will million, driven $XXX sequentially, was segment XX. OFSE detail by pressure by across revenue and Starting you up lines. North SSA thoughts and product our by more Equipment X% was offset walk sequentially. Subsea East, $X.X

was million, driven volume and XXX EBITDA was partially was improvements, XX.X% were inflation. by margin international cost with operating sequentially, $XXX North up the points increased XX% basis revenue XXX basis OFSE up offset Year-over-year margins price XXX increasing rate both margins rates basis quarter EBITDA income in by increasing $XXX America sequentially. with points. up points were X%. margin up was XX.X% and sequentially. income million, sequentially. Operating in SSPS, the Excluding OFSE EBITDA XX% quarter rate

a legacy margin were performance in in under EBITDA incurred really of November. Legacy quarter. management particularly OFSE, are absorbed in sale OFS XX.X achieved the segment XX%, Russia OFS local to excluding the which to in EBITDA margin the of fourth We OFS completion prior the costs with pleased the margins

billion Gastech Turning up up for award were great quarter $X.X the Kasawari services Gastech CCS Global's the awards RPO in a were award services $XX.X to RPO XX% Gastech by year-over-year, quarter in Within lower billion, contractual project. RPO, partially offset the orders IET. orders, second was XX% gears, supported valves orders, production compression the year-over-year, up fourth the $XX.X by down year-over-year. for Slide inspection phase down with closed Gas at Venture XX. the up of IET IET billion equipment Pumps, of services technology billion, X% orders, an performance X% IET onshore/offshore for were in driven out quarter a sequentially. were equipment and condition increase up The XX% Plaquemines year-over-year. $X.X strong record were by XXXX project, of ended year-over-year. and orders equipment orders orders XX% for which year-over-year IET LNG and and orders by number upgrades. a PSI RPO COX orders technology was Gastech monitoring were for year-over-year. and quarter orders controls were Industrial equipment up and billion. offset orders $XX.X for

the the loss pushouts. outage backlog. of XX% operations, XX% to to foreign $X.X services our of million, service quarter by was delays project for exchange Gastech XX. primarily Gastech was revenue was from year-over-year, by services and execution upgrades. of up versus Turning related This Russia year. discontinuation X% chain the movements, revenue the lower year-over-year, prior Revenue contractual equipment revenue was supply the down and driven driven Slide up

associated was for services we Gastech some basis X% dynamic revenue chain we and commodity year-over-year the down prices million, controls inflation rate This year-over-year. aero-derivative year-over-year. higher delays, supply continues while up normalize maintenance year-over-year. from Industrial in XX.X%, cost was EBITDA shift that As year-over-year. was components. manage time. pricing R&D see down schedules Operating Conditions income XXX offset should inspection points of slightly spending, to EBITDA largely previously, also equipment was that delivery margin monitor was to area to strength points mix, year-over-year. was year-over-year higher we've a down volume. margin and XXX believe noted PBG IET higher stemming and customers, down our will revenue by was gas XX.X%, higher is $XXX $XXX million, PSI continues continue for and X% going monitoring, with partially forward. technology flat in over an basis down turbines Operating and and delays IET

the increasingly we Gastech ago. on of profile As a mix execute in a equipment representing versus XX% revenue total the backlog, are revenue we in XX% our seeing revenue with quarter equipment year our record meaningful of shift

a of as segment I would looking like XX. segments new Slide give transparency With to we're our around two on in to expectations. details each order program. cost business update to for Turning segments, providing our as reporting out our another outlook you outlook further well and for the forward level formal business

with framework, feel we're of as range As as to OFSE tailwinds operational outlook we we potential business for enhancements improvement. margin IET transition providing drive across expectations to different new variables that outcomes. help and a Overall, continued this well our the highlight growth the optimistic drive on and also solid both the

actions quarter the cost the focus through completed million impact full outs the end In by All achieve addition annualized opportunities, will realized year. second executing $XXX our fourth of Baker by this growing XXXX necessary of pipeline on key a at end of is the by should transforming to end for this the be least in the be organization Hughes to commercial of target the quarter. and of

and For Baker $X.X billion quarter and Hughes, million. $XXX we billion adjusted revenue and between expect EBITDA between first million $XXX $X.X

we full and $XX revenue expect billion billion between $X.X the $XX adjusted billion. and between and year, EBITDA billion $X.X For

international OFSE driving the out markets, seasonal cost backlog SSPS and between this reflect million Factors revenue timing pace seasonality quarter to $X.X in include of expect typical for America. between billion conversion therefore, $X.X million. in We, and results seasonality US, activity our declines international of deployments and and initiatives. expect the as $XXX usual $XXX For as in range OFSE, North some we in billion well in the EBITDA magnitude first budget of quarter first

activity led another year spending virtually the full we likely to growth strong double to all range Africa. geographic for basis. expect of internationally, on digits the market the activity in gas depending the the regions, we expect increase remain a and by middle balance Latin likely North East, West year bound of levels For America expect and among In and year-over-year we D&C on XXXX, America, international private levels prices oil Middle spread across year natural Overall, operators.

However, we believe that this digits in spending double level of activity as into well as the cost America North high XXXX. inflation in will still D&C translate growth

international out improvement the continued and outcomes cost initiatives conversion pace in a chemicals, various this segment the between OFSE cost billion North in activity, in $X.X XXXX. Given would macro $XX.X this expect backlog $X.X of potential Factors and we initiatives. include EBITDA range billion in of backdrop, revenue in driving the $XX.X SSPS and America and of and growth billion markets, pace billion broader our range between out

of pace and chain industrial by supply driving or in will tech range services. in The be dynamics maintenance continued between revenue at conversion improving expect billion a equipment impact For We, of the $XXX growth modest expect IET, revenue Gastech equipment, $XXX backlog by billion deferrals therefore, chain supply for quarter activity industrial and growth delays year-over-year conversion at technology. and major this revenue on IET the and growth supported any strong million. Gastech Gastech EBITDA backlog $X.X we million and $X.X basis between first in factors driven

timing and now range EBITDA as onshore/offshore expect year will IET LNG $X.XX backlog billion and drive of $XX.X factor largest movements, orders in we and equipment the tech, to related level the for Gastech For $X.XX impacts between pace be the the associated activity Lorenzo forecast delays. by $X.X revenue billion $XX.X in and range to services. supply any this year, billion, The mentioned, include impacts and currency maintenance improvement driven driving chain production. and factors Gastech foreign IET of at billion. industrial and billion this R&D supply that We full investments new spend pace between conversion be $XX.X our full energy the chain of of with Other billion between

over will With call to back the turn that, I Lorenzo.

Thank you, Nancy.

to IET, hydrogen, to is for committed where carbon energy, power. across in increasing our and delivering we capture Baker LNG and XX. opportunities develop and including Hughes to growth Turning on focused the capitalizing clean our shareholders. are We our technology Slide on OFSE and R&D remain new portfolio customers

respectively. remain and to our return committed and in in businesses where our and OFSE we margins returning world to will cash cash to optimizing business. free generating strong And investing we for this while also to margins on continue to growth focus of of are XX% finally, shareholders and corporate and XX% also We structure XX% enhance profile EBITDA to IET flow ROIC both our XX% XX% free flow class targeting increasing across

With that, I'll Jud. turn it to back over

open questions. the let's call Thanks, Lorenzo. for Operator,

with Evercore first James ISI. comes question from West Our Instructions] [Operator

to And LNG. maybe prepared the position was you plans you love know I this some given in see maybe your we were some in to to huge gas has made some comments I but side. So going country but a dominant orders you on remarks, December, LNG love as I'd we were and comments in further L.A., your in kind to know, get together you to that going Houston, LNG. huge I Jud -- for reserves for first on Eastern of was one year how Middle going I’d rolling Lorenzo, When leaving, were

seen hasn't And North supply XXXX, high experience FIDs signed natural the at but Sempra Arthur, and can you tell down. the it's slowed and NextDecade, pace cost the Port for discussions within there's interest which a X agreement. gas up I to look In some did we that of the a term momentum. also also another and of And have customer near prospects been remaining, you the lot investment back a of you've both inflation, times, been which also rates, with definitely conversations term has think I've since And trip, from cycle. as customers slowed positive long and I announcements positive some some America LNG, related I think

So current starting some have agreements. recalibrated importantly, environment, globally think to costs the the the project offtake in success of actually and the I securing they're see operators to

out but think continues just that role, well there this natural I LNG a realization are a So there's the also to more need as play energy. world as going key gas to and transition destination not

to that. we so expect MTPA of year a sanctioning are number activity comfortable projects actually that FID see close this feel getting exceed XX with, and at see We And least to reaching FID.

it's So not about just XXXX.

we're seeing with I also think good as now, have and the also modular LNG. we in be portfolio and right to beyond going environment XXXX we XXXX actually approaches a look at time and of the

And Nancy, are and role returns, to -- Brian as on the then maybe just how probably already et focused Lorenzo the cetera, here, what and relative focusing given about shareholder but to your same, capital it's maybe for CFO -- were on? thinking allocation new relative you what

Baker in allocation mentioned, Hughes and to committed as remains continuing balancing policy, capital to also a and invest flexible shareholders opportunities. to Lorenzo growth already returns

basis. in efforts new flow back to portfolios the bolt-on current our also XX% cash well in return allow really OFSE that cash complement maintaining priority and to XX% That us balance also shareholders. as excess invest from to conversion opportunities flow This adjusted as the in free a sheet a through us energy. gives to and strong philosophy on the ability XX% of will cycle with free M&A of IET starts framework of our Our targeting EBITDA will

of And billion growth to growing as we to shareholders, opportunistic and dividend during given we complementing with opportunities return XXXX, both reminder, will regular for we a our total return a cash to prioritize dividends also look just this and shareholders IET $X.X through as repurchases. buybacks. did share the secular So

in both Well, here Florence great. you a of seeing to forward Look and days. few

comes Gruber question next Our Citi. with from Scott

So just cash some Nancy, the cash I rate rate. cash And comment the XX%. the in beyond a working sounds there working to start color to XX% EBITDA guidance, also capital want provide rate? the it high. growth? free that rate top to more free year. on like But the on I noticed just adjusted additional headwind that, can year. flow does sound this like also It on Is conversion forecast looks probably It is some conversion you this tax capital from decent line tax

a do to free we primarily conversion shutdown should of below XX% around cycle. about of range through for ‘XX, we didn't conversion materialize cash that cash the potential this of the operations. Russia handful had flow given And saw generation we $XXX be million million items And the believe the $XXX

inventory also for in Gastech prepare as saw build in from 'XX. cash We and equipment OFSE growth consumption we

OFSE of almost And same as about $XXX higher cash lower we believe $XX revenue. will XXXX, We the And to cash international roughly also around revenue million to customers modest a then cash the to EBITDA, that's 'XX, think then and And X% in X% versus year equipment. taxes million in year. 'XX, collections another versus should source some but for zero use higher growth from low strong cash of we be should range in restructuring we as capital mid-XX% 'XX. Gastech working with be also still in and of during the be had a CapEx, of about

little that of So a picture. bit a you hopefully, gives

it items for Yes, And a couple about does. unique EBITDA year. then impact thinking the just that

going late. benefit the mentioned kind is build the course year really I the and that over you hit more of restructuring think of to in

to how EBITDA out cost across a swing to million euro we've So some about $XXX number year? much this the and weaken of there starting here and also, color think actually seen a then big dollar in additional currencies. other the And just impact the of how

Just know for putting the was second half impactful, FX the about think of this together that year? but the last I the euro thoughts in how terms into guys year just in weakness on did you guidance the built guidance. that's

really put So the categories. cost number a we the efforts from on program really cost put I a overall. remove operating two and the structure and September that more out, efficient ways create to of organization together identified out last cost have in

about business about it down push around identified can cost operations do business structural targeting. is more streamline $XXX basis. cost we're and where of HQ. managed and reductions to organization four product HQ removing in we business from then two our and some into segments layers on simplifying really a the three million quarters to headcount from structure two and implementing cost companies reduction leaner the first also strategically out The include in the activities thirds These That's from changes a from thinking efficient

cost bucket second The is optimization or cost controls. really

we -- by optimize So of the headcount in completed all by run And to to of third those rate of technology, the areas should, and reductions fourth of end things party we external should expenses, timing, quarter. then sorts also our sometime QX cost support the terms then this of [functions] and actions the year. all QX things. optimize annualized the our services, And process have in end taken in hit

terms there considers then plan today be conservative our that on upside to pretty And in is USD, the piece revenue appreciates could for euro guides versus if some our IET. other FX. outlook the the of So also

more to just Scott, And color. some give

since of I think of made Hughes. And we've the then feel in of we and out, the We've we've second cost in up $XXX Baker dedicated go set coming see I of made we'll got operationalizing on a September. year, yield that's half this. of run and execute some changes the first seen million actions the the rate the team lot about been the actions announcement this a half. within good you've lot will to annualized in which through the And very a the

from Bank comes Our with America. next question Chase of Mulvehill

outlook back having bumped The 'XX up X%. you about guess, to come strong despite orders your the fourth of for for new if order the billion the we is quarter guidance question, to outlook first IET up by of order. it bumped like kind $XX.X kind about segment, And billion. you a I can really looks $XX.X order

you you pulled outlook order of means pulled maybe So you you probably you -- forward. have thought just I your would orders that really didn't that given kind 'XX, some don't into orders raised any think but

really think we like orders a the kind we of the to about what was when is driving about of as the when driver, drivers that, bump LNG some obviously, bump walk and think but So of 'XX well. through in kind big 'XX? And

a there's out $X.X noted, some of with of there. orders, are the lot year, large an was when record we a at IET year billion. you and strong moving the about for billion as particularly for still $XX.X orders at 'XX, And pieces projects XQ as within exceptionally think really, that a then

in will industrial broadly asked be just with modestly. by about and will orders. about up onshore/offshore to then for services 'XX though, orders was think than the And 'XX. XXXX orders so, will and as year up be were be then we slower And 'XX huge driven 'XX. The a in think 'XX as be Gastech pace biggest the onshore/offshore. equipment primarily driver, versus down you drivers, modestly grow with modestly those 'XX onshore/offshore line orders speaking, LNG likely down are growth a at somewhat orders tech We in versus X% do Gastech probably in about XXXX, And should

the $XX.X mentioned, you range for do billion IET be overall, as the So in orders to year. to expect now billion $XX.X we

the activity to Speakers] And again, billion there right increase [Multiple billion think through seeing. we're we And Chase internationally. now $XX.X as it, I $XX.X pretty think go we that reflects activity out is strong again,

lot a the release the color press quick energy of clean follow-up as Lorenzo, new power here hydrogen around with call and in on and a opportunities. Obviously, CCUS and maybe conference well.

some legislation So accelerate we helping of these that's markets. obviously got some

the of that for markets 'XX you for outlook opportunity alongside and the about these beyond. talk So and some have Baker

the early saying They within we And with And are as that said, Act significant in States forward And United And Europe was But around stages anticipate has likely we CCUS, $XXX XXXX, the of is achieve legislation Inflation We do we're lumpy. pull energy we increase from up go new bring XXXX. help we Chase, again, made transition by look million into I hydrogen. XXXX, forward. place. start in if there's the as the to that at come legislation to be really firm which as helping energy starting outlook, to the Reduction to development may seeing can that pleased a been believe spur you some we're we progress orders. firstly of in anything projects. some

and be over the in new So And orders. balance previously, of decade. of the should we around XX% the of end through years, the billion accelerate the $X about about billion. the be of our stated three to the energy of of then the content to energy by orders Gastech range And decade, representing the half second next $X if four new middle new orders believe energy think the as Gastech of XX% you we our decade, should

is the which is We've investments about market the legislation. and feel into the clear. of segment way really the in direction place of good tech trial on So the got back of in new creating some the

Our from Jayaram with comes question Arun JPMorgan. next

is margin My posted first question XX.X% XXXX. is in the EBITDA on for your Nancy, IET a The guide you XXXX. midpoint XX%. of guide EBITDA margin

guide walk wondering XX% change through this driving what's over moving the see margin And was then towards that how you I if XXXX-XXXX So year? margins you time? could

XXX If we in look rates at from decline the would a bps full year about IET guidance, margin apply 'XX. it

are energy R&D mix up it around move the around the continues the and so, efforts. equipment drivers is real step-up new in And to our

'XX we levels up. 'XX, higher. going the XX% we our effort commercialize to Met $XX results our $XX are things we million term, been there, or mix, Mosaic. would as that Power previously as million And for equipment our guidance of the in on it's margin equipment was that technologies really most to promising year, can about revenue think and up I So by Gastech include be 'XX you reaffirm some indicated. orders and longer stepping like the communicating, XX% look this and see we've R&D, likely we're that And to

a I actually just build, And and maybe this mentioned think Arun, for through as good we've it's a big go equipment business. to our add, before, we thing

close that. to associated years, with in increasing then the calories service the And XX%. is later base installed Our we'll get

to come of factor starting to said, the we by up to take the nature in services the years rate after feel a through the margin three next equipment XX% two cycle driven it's back So longer to, but this be confident flow and through. that's as the rate, to we EBITDA to of able business,

more And markets which -- your on you you go-forward was a or I plan of focused wondering Lorenzo, is, is do my subsea XX% will Baker? basis you capacity. plan? on details mentioned be markets that I if provide plan rationalize more And markets follow-up to for this or could which believe the

Maria that mention SSPS strategic undergoing did and We have team been Claudia review. our business, a been restructuring we've and the

we our still the really subsea some the XX% machining. are at capacity, We be capacity also basic in of look production rationalizing outsource as going of tree decreasing, by that. to But stages early to the we're XX% and

we're high cost You from perspective, relatively some in countries. cost can a imagine

opportunity an also rationalize was typically it's Asia, able to back that UK. done to capacity Latin for America and be machining the so to us And in

cost to the continuing good we're million effort being we we about broader $XX achieved how So look savings forward, the million feel that included top from out $XXX at about go on OFSE. of and

take the the backdrop got So a good still for going through handle in this come outlook around and has SSPS the team early days business, see for improving and forward offshore. an how it's we'll But to of XXXX. the on strategy

from Dave Barclays. comes question Anderson with next Our

me. just Lorenzo, one for question

Are on Baker targeting, certain some to part more -- KPI your and recently of management business. in philosophy hear like wondering [Ganesh] what a to change is could from changes I in change? the and of IET trying with new talk part you're you're about the you there And thoughts obviously management just the a instill this in bringing the made And this just significant you was trying achieve kind kind Hughes there. you're of just there if I'd a It's some in outside of to of made you're that. targets organization? somebody You big

technology future place. also made growth OFSE of to segment industrial with IET found it's digital talent can bringing and we great not think as saw I an of Hughes, climate also two forward, space a in a journey, drive we at evolve the built year the services, having you half and the Also energy look from growth if the anticipated, going solutions in year And comes and going solutions, growth but space. to it's us experienced Rod to Ganesh business and the both a second digital in is journey. and to of background also one continue the we industrial the announcement knows was and we than climate as Baker maybe is that September around it's well an where segments, growing decade, we how take the moving new management. at we multiple said the of we asset the And enterprise of level. the help solutions the in how sooner look discussions the technology from And at And continue are

forward great And with And at we're out helping look with and overall, made how the happy So very is EBITDA the and moving as Rod But again, the it's plan all new on. candidate September laid the years, across moving segments. with right and contemplation with XX% you we achieving at he time. the be two the the the we've staying us the transition structure. then in will that of, next for three changes

Our comes Bianchi next Cowen. question with Marc

quarter? in seems that the imply slope in steeper traction than It throughout year maybe improvement I XXXX. about see curious guidance confidence could progression for much and talk we a wanted your see. to if of quarter the first we you the in to ask first typically I about was how might second

through we've there. flows got the confidence mix is quarter. think what Look, large we've And the before that mentioned in first is equipment a I

at the And backlog so But you how at hand, visibility there. the that IPO if at as Also, rolls got $XX.X obviously we've out we Gastech services go we've impacting is the billion, EBITDA as so got forward, on look that's our well. the rate.

just So cycle think are of the converting. profile equipment is we based way are way which the the longer actually normal, I in which this year pretty in projects the and seeing the the on

the to the being but transformation that out year. that's cost the year to for also the So sure million we visibility achieved we the that of outlook feel end be gave then the wanted $XXX with with and confident make going annualized by

you 'XX. to has for low macro the LNG up following but discussion year-over-year, you end. be then guys orders Nancy, orders the at on heard I outlook the you And around that near say that have of prior FID think a expected I LNG doubling down

that you you of could maybe So if a talk little kind bit, to could. just

again, Yes, of way maybe some -- come and the the aspect an of it's orders lumpiness the through. of

billion the we elements again, as the is think $XX.X there billion and the will the of within go $XX.X orders shift. the through I on this, total focus and

the LNG as you will versus XXXX. and look going to again, and at probably think, that's up FIDs the MTPA XXXX be sanctioned, be I from

question Stanley. from Connor Lynagh comes Morgan next with Our

that sort that improvement, us basically, for at control I so here, two range out guidance others. terms would you of the the important? basically related the of chemicals I'm party one the OFSE, questions you is most sort service within specify called factors of what a customer third have don't range. curious, be driving growth, in ones of think over, that that affect are among for I'll else pace the growth, are guess, could And I just do few sort you plans But what providers out ask the couple different out swing watching them a have big you're hand, the you achieving call Could just on variables You pace of you maybe the of feel called or out? of call changing once. to activity something risk then, you that? or biggest you

walk can through I some of kind of the Yes, variables. you

cost related generates North lines midpoint talked then the we've and sale double America range growth then based growth as really OFS by business North of significantly point digit assumes fundamentals strong double in digits rates, prices benefits same sees double locked of backlog we conversion within normalize growing We the and higher high market efforts. assume assumes the the that about growth. The out concentration DMC for growth Russia. XX% international backlog margin high see to stronger high incrementals and chemical remains OFS of to production SSPS Also, And business also and some for of as assume with higher revenue continues incremental conversion. the the SSPS that digits, we the in East driven in portfolio, high then in modestly range range. in it's international concentration XX-plus the mid the percentage So NAM, Middle our adjusting commodity margins business stronger on the growing America, already from our and

America conversion then also downside, essentially digit OFS So I the North flat and low on the and low growth is the assumes goes remains would same range. the in low weaker XX% margins point revenue really and say incremental growth, SSPS then international to double backlog

in you that Baker things that Hughes, third where customers or then service bottlenecks, of roll just And macro not on whether slow see party is largest is to providers want within environment? the based just the that terms is potential or

forgings, we of look got the you monitoring, As some at as mentioned but supply We chain of aerospace it, about monitoring to that castings closely. the flow managing. we're that comes disruption at and the factors some the associated you really look supply we've you've in obviously the the think with external check, very And heard in we're chain, down that IET. we're component it

well. in improvement some see the to that starting are chips electronic monitoring as We but

So just users of components. something these that be we're keep and not the we've got that aware only on to focus of our some

you. thank Understood,

now thank all the earnings next may soon also out you you to look, call of to speaking very for taking to forward everyone week. Florence seeing you you the time and today. Well, the much look right. in join All to some our in close I Operator, call.

Thank today's This for gentlemen, thank program. participating the Ladies in you and you. conference. concludes

great Everyone, disconnect. all a may You have day.