Baker Hughes (BKR) 26 Oct 232023 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Baker Hughes Company Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, the conference call is being recorded. I would like to introduce your host for today's conference, Mr. Chase Mulvehill, Vice President of Investor Relations. Sir, you may begin.

Thank you, Justin. welcome Hughes' and Earnings Quarter everyone, Call. Conference morning, to Third Baker XXXX Good

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

be with will which remarks webcast, our during also We also website. be prepared this can found using presentation on our

discussion filings and income website the can and be could forward-looking guarantees course for differ measures As of non-GAAP a this conference cause our to performance actual provide operating during of will not materially. found are to Reconciliation the review of of results a risks statements. in reminder, of release. that statements a we earnings These GAAP other Please number and and factors involve future our call, assumptions. SEC

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

and Good remain pleased quarter our Chase. third morning, you, outlook. Thank for the everyone, were We joining with on and us. results thanks optimistic

see As LNG and maintained with from in Global on IET strong Venture large Energi awards you in SSPS, both in Slide Vår Subsea. and can performance coming orders we X,

delivered $XXX and also of booked our range, EBITDA energy strong almost flow. end at of operating guidance upper We the orders free million generated of $XXX new cash million results

We continue despite to portfolio see uncertainty. positive momentum global persisting across our

oil macro Slide resilient cuts the and demand rebounded market. of X. on combination production to tightened as Turning Oil prices the have have the

to oil likely the market see the of As is draws result, inventory XXXX. a rest through

will factors monitor into of oil growth world's from look in the of important XXXX. the discipline face to risk uncertainty geopolitical largest economic demand we producers, pace the as and Continued be

expect digits. mostly the America remain of second strengthened have high outlook. to single in plans mid- upstream the up We international our XXXX Therefore, confident mid-teens we drilling While and still and spending year-end. year-over-year by be development through completion to oil half up this set year, in prices during are North

previously, to expect to cycle into to said relative more less do we have durable cycles. Higher for development operators' this provide year. momentum spending next prior prices be As we swings sensitive and hydrocarbon price plans upstream commodity positive

is solid controls. another growth XX significant the led equipment offshore from there Aptara a subsea XX which spending trees, risk, award a caveat in African and Angola of by Baker of subsea see offshore horizontal year consists we were geopolitical markets. awarded sub-Saharan offshore operator. during still it do upstream international market While XXXX, is the the trees presence Hughes' early In specifically, deepwater we with and includes quarter expands in This and and manifolds order growing

growth intervention well OFSE Vår the booking being North X also and a from Energi, saw contracts being vertical deliver Balder to tree systems order an major X services long-term continued for the one other exploration multiyear Sea, contract logging in the Field. and for

to Globally, that global softer to XXX consuming markets despite over expected quarter, at workers, interrupted demand Turning X.X% to In gas is X% economic estimated demand effective Europe be utilization about approach LNG LNG expect LNG Year-to-date, fundamentally market geopolitical third This weakness year-over-year. up compared the XX%, nameplate this the With of historically up global like LNG year. or represented LNG and MTPA. record in XXX global we MTPA persisting LNG. a has global market. is which which to by reached tight spikes from key XXX LNG over capacity year, last MTPA China. in than anticipated recent operations at and the XXXX demand strikes resulted situation price demand LNG and remains by current Despite facilities. is tightness Australia the temporarily tight. LNG economy, levels evidenced a soft was This just several approximately has

demand to of which next utilization LNG forecast forecast capacity should nameplate remaining result MTPA year. we elevated coming into increase we just rates levels XX Looking in by as online at X%, XXXX,

should to relatively by helped utilization healthy, see LNG XXXX which balanced out markets a sustain global and to offtake Looking XXXX, FIDs. of we remain keep strong strength supply LNG growth levels. LNG similar prices of at in contracting, which growth, key demand driver trend has the being

During agreement a of part equipment we equipment to of received provide additional and over master island Global the quarter, XXX an upsized supply as liquefaction to order our MTPA. power Venture

Global's modules LNG for projects. MTPA MTPA a we and reminder, As Venture Pass Calcasieu XX both have Plaquemines provided of XX

of quarter pleased Middle conference. Emirates. Ruwais and for Baker of will East. LNG the were The was state-of-the-art first in in all-electric by at we trains year's will this be electric Ruwais the systems LNG ADIPEC is fourth XXXX booked one ADNOC, the technology, to MTPA the making recently LNG technology announced LNG BRUSH X.X Additionally, be electric liquefication XX-megawatt to project feature expected ADNOC award Hughes' motor behalf projects the X on The in compressor Arab driven of and Gas by awarded be our United

we successes portfolio in portfolio, We ELNG in Generation of These our to from investing to strategy BRUSH for recent acquired and are our which continued compressor traction as enhance first of support XXXX several including secured additional orders portfolios strategic complement well our to then, commitment trains bolt-on further efforts our quarter opportunities electric our have solutions. Wison to IET energy. X from current validate contract lower pleased in industrial in OFSE carbon the a can as that we Power and provide see machinery sub-Saharan Since electric BRUSH new in Africa. the for M&A machinery

FID Through third year. capacity this quarter, Slide taken to MTPA XX has the of Turning X.

XX in approximately both Therefore, similar between see expect activity LNG XX given orders and FID orders The to book receive For projects both of taken U.S. sometimes XXXX, strong, remains LNG XXXX project to the MTPA larger and XX in year-over-year FID. expect levels XXXX we we MTPA to internationally. totaling we projects LNG before MTPA of increase see pipeline end in have could we future of the LNG LNG and for Gas on XXXX. in pipeline, which growth structural growth in global This construction FIDs nameplate XXXX. Based represents for line the existing near-term FIDs to under long-term have from further almost capacity Tech Tech sight Gas an XX% by of and significant reach Services. Equipment XXXX, provides for capacity and installed capacity, XXX

XXXX, there installed global this base come coming scheduled since almost over LNG Importantly, and years, are Hughes between of FIDs of online XXX projects MTPA now and an been XXX selected capacity. to the liquefaction in have been for These MTPA our representing has new increase XX% Baker XXXX.

to Turning Slide X.

demand in versatile is the a play low-carbon both will fuel. that It and decades and forecast view role will world's to energy energy an improving that satisfying world. broader destination in primary abundant, increasing Accordingly, energy gas many the grow needs due mix. per quality source. continue also and for the held beyond long be come, and while consumption global air We population have We developing to XXXX the critical as in energy gas to coal transition reducing natural displacing natural fundamental will a capita emissions, rising

global energy with meet this essential to is a and reliable affordable economy. demand to it ensure strong growing However,

demand upon emissions. This meet primary is burning mix gas a global Asian will over energy coal to cleaner like source many is energy coal, share renewables higher and XX% opportunity in energy energy mix. needed of being countries in India, natural be importance a baseload coal much to of the still XXXX. for demand the increasing reliant Today's and/or be the mix with energy decades. coming China which heavily In with energy for is paired sources demand of increasing CCUS That as to energy an global although displace minimizing all the on said, accounted

solutions this energy synergies spending mix. across OFSE our This transition to takes shape. beginning unique IET as energy provider opportunity the reflect portfolios, to of providing plans evolving our customer presents Importantly, are an many be a and customers' long-term significant integrated

to X. Turning Slide

As energy transforming our returns in strategic deliver new in margin for energy investing and are of cleaner and forward, safer, while it stakeholders. planet, profile and our plan we building to transition. shareholders to the strengthen is value focused our the also Through for frontiers company framework core executing we and more sustainable a our on key these growth and for pillars, people positioning for take efficient making our

we time through focused discipline horizons. X and As markets increasingly been which of energy time we Across of optimization people and productivity. and across efficiencies, on strategy our accretion operational evolved, focused expanded are spans have have the horizon, asset enhanced XXXX, on the margin simplification organizational strategy first the our and execution through driving

control. actions these well are within Importantly, our

our to see Hughes period, Baker macro business we this that During remains X benefit tailwinds from across segments. the poised

the offshore in multiyear in the Specifically, benefit and from by we growth LNG the remain and as to positioned cycle spending gas international upstream as natural continued well strength well increases markets. driven

focused uncertainty. Throughout on short-term navigating and political remain in aerospace horizon will on we we supply specifically be focused work. way and simplifying X, sector also business transforming broader our the constraints, macroeconomic We and

evolving Additionally, energy we commercializing digital further also committed remain our and while to our portfolio, offerings. developing new

margins will this to OFSE underpin of deliver All and XXXX. IET by in our goals in EBITDA XX% XXXX by

investing rate. our presence growth, During the next second to phase to spending we sectors where for across solidify continuing installed XXXX, same natural grow equipment and extends base. Gas energy a our focus the shifts see in lower new the At growth strategy expanding out while time, leveraging Tech Services of gas towards the horizon, at our which to is industrial and the upstream

is expect gains XX% on just as would stated which targets OFSE drive the during OFSE To by achieving and expansions Also for XX% improving increasing across this and Agreement of deploy segments business our gigaton XX% expect offering customer further EBITDA margin focus and Cordant exceed reduction of both also efficiencies per reductions, in efficiency further X, Flare emissions and solutions in across X.X we to operations our and X% and We COX Paris digital almost oil Leucipa, and an IEA horizon goals. IET respectively, we targets. estimates gas our businesses save IET, to opportunities meaningful above the XX% year, our margin horizon. illustrate, equivalent of ROIC

end into this projects, our expect regardless to X and solutions cases, and and, our Considering broader power market. the efficient will orders backdrop, horizon this position hydrogen, across XXXX emissions the many energy including to need and to across have and beyond will frontiers, firmly solutions component energy CCUS, to over time, most energy a $X By base. geothermal. expect looks clean billion industrial smarter, in for billion customer management The new compete where in the be and Hughes much prerequisite new a decarbonization execution energy $X of coming a more we to Lastly, Baker years for sector. fundamental XXXX we extended reach industrial

Baker more that than structure execution and year to yet while tailwinds continued helping robust years, momentum over Before XXXX. set XXXX OFSE OFSE activity has X to another our our drive improved Nancy, have And Hughes to speak deliver are to push our to positive and most operational experienced customers turning us offshore like markets continued to of in we commitments growth IET and importantly, strongest in record International year in orders the strengthening where LNG built to I'd on are our to both is commitment during the to set and cost and IET. shareholders.

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

market well were our on results Equipment outlining both our conversion to million backlog better-than-expected IET We our to full and begin high continue in details, guidance $XXX benefit fourth an and in quarter Adjusted consolidated our tailwinds. then overview by before EBITDA I XXXX with performance, Tech Industrial the briefly results and Slide mostly range, segment very as in came year to driven strong from segments will quarter of continued execution improving of at XX outlook. third Lorenzo, due Gas talk of execute pleased end with Tech. and

operating was million. operating million quarter. income $XXX during was the share GAAP were Adjusted income $X.XX. earnings per $XXX GAAP

of share this happened Subsea Excluding IET quarter highlighted another time least third and has segments Systems $X.XX. at for by adjusting consecutive since were strong items, XXXX. & earnings the the first $X Surface Orders per orders, quarter Pressure maintained of momentum, record for billion business both

us New on which brings Energy $XXX million this to $XXX to target orders year-to-date just to totaled under hit $XXX orders range. almost our $XXX and puts million track million quarter, million

from over the IET levels, and at XXXX, strength the which sustained now orders, and visibility provides the million strong is this at cash to at cash XX%. was SSPS since strong years. of RPO conversion Free EBITDA again is Due record flow RPO highest and flow level volume adjusted quarter, in resulting coming free coming in earnings $XXX in

of conversion flow cash free to target XX% XX% to continue We this year.

Turning XX. Slide to

debt as quarter billion balance of remains a cash and ratio net ended $X.X Xx. adjusted third of Our EBITDA trailing we XX-month sheet strong to the with

to XX. Slide Turning capital on allocation

We dividend to the power flow continue to ultimately over our our committed growing growth structural company. to $X.XX $X.XX cash quarter. dividend earnings with increased excess by return We We shareholders. free to tied the and remain recently per growth of to time,

Additionally, repurchases the shareholders. our during of we to of million. to returning which $XXX the stock to dividend repurchased XX% and end XX% of million to cash the quarter, investors. buybacks third total million quarter, free have we the Including $XXX end $XXX committed the flow through of at brings third to returned We remain quarter

performed of & Services give segment SSPS performance the and on sits America. at Accordingly, robust in Oilfield through our driven revenue momentum in segment will Services SSPS consecutive expectations awards thoughts I you same offshore forward quarter, RPO billion, quarter the on XX. the last quarter, walk XX% you year. levels. at Slide seventh SSPS above by maintained a Now better-than-expected $X Starting of detail resilient is versus more orders $X.X the The and above in was continue North as project and SSPS X Oilfield and our outlook. which X.Xx in business for Equipment with margin up now strong billion book-to-bill results

the and $X year-over-year. up up in quarter revenue OFSE X% was XX% sequentially billion,

revenue Latin other Excluding X% SSPS, sequentially was as offset in international increases in declines America regions. up

XXX our partially slightly offshore of North OFSE million, XX%. EBITDA rig by $XXX up midpoint expectations. land the land outperformed X% America outperformed strength count and quarter OFSE XX America North revenue down U.S. fell revenues margin in America X% rate SSPS increasing was also Excluding above while sequentially up as year-over-year which with million. sequentially, sequentially North offset and $XXX X% points up points basis margins XX% with SSPS, was the that was year-over-year, XX%, guidance basis margins EBITDA in

and a sequentially. billion. quarter billion Venture $XX.X X.Xx, timing components. ended during almost & a Now performance stronger by segment billion, upgrades and orders. Major year-over-year power were basis island a LNG XX% RPO equipment The Global. of and Tech quarter Tech on billion, Tech provide and lower-than-expected Technology an to Industrial and up during equipment Industrial to billion Gas book-to-bill liquefaction quarter. was Equipment liquefaction in Gas aeroderivative Hemisphere to Equipment to at Tech up RPO XX% Eastern quarter chain X. $XX.X Gas $X.X major Services orders for X% was due the $XX.X RPO was due Gas had volume included the slightly in by consecutive also ninth turning for delivery project XX. equipment LNG awards awards. the primarily robust volume This quarter Gas Equipment Services and IET driven award in Slide above included this again $X.X the additional supply was FLNG IET challenges record above performed for orders expectations sequentially on Tech, up higher IET in Energy also to Tech offset the

year-over-year, in of business, for Industrial a objectives broader was asset midpoint higher our X our guidance above balances by growth to XX, the IET to integrating under coming up XX. backlog. this of as announced shown management spending for Technology increased as led mix energy prior realignment with $XXX basis Turning we transparency our Solutions. the equipment was by drive up to and that margin XX%, CTS execution year, capabilities also and our year-over-year, our by R&D returns Gas XX% engine we was lines was October well vectors, Climate billion, Slide our September, and was R&D on a portfolio. In Tech driven Solutions on up IET Equipment EBITDA performance investments. year-over-year focus key in technology million. margin value over million, XXX project margin to increase Through realignment, which operations for effective versus X spend down on improvement. XX% quarter structure Baker product driven XXX% and and across $XXX growth growth providing improvement and This points our new Slide simplifying IET demand revenue related organizational key Hughes, $X.X EBITDA the decision-making higher drive are our

is Hughes Before turning to I'd of quickly XX, and on a Slide to company, our around outlook, part the free our into expansion is attribute meaningful that growth areas. differentiator have IET for we like We highlighted growth we speak Baker story to visibility structural think flow key a can the decade. the of we this drive for to which part cash X growth latter will believe this as

Based we first XXXX equipment $X is The on LNG will our and LNG book equipment across of orders. billion orders XXXX. expectation, almost

Tech a IET backlog As coverage Equipment giving a result, RPO over our at few is Gas record level, the strong years. next equipment

is second Tech Gas Services. The

As we XX% the Lorenzo will XXX to additions base through to timeframe, earn XXXX by capacity decade. service Also, over of from this the see LNG the term. growing today medium installed begin the global the increasing MTPA of end XXXX during revenue mentioned,

and LNG we Tech on of franchise, $XX.X Services our is Given significant Hughes in visibility beyond returns equipment billion earnings RPO of our Baker majority accounts Tech XXXX that as through almost these for Gas installed projects, Gas and from the have Services. XX%

industrial that they collection much area be growth is We solutions see industrial that more technologies and can of that believe than businesses third so the across today. products. we The these are

January Cordant to opportunity The our starting advance accretive can integrated focusing platform simplification Industrial focus that been which of recurring we've management driving year. have industrial Solutions, improve provide hardware the we profitability this launched a our to Products, at this There for opportunities process streams the suite is margin performance that in asset on is in platform, stronger point future. and allow and the solutions of industrial for today, supporting revenue In and into solutions significant this industry on provide an rates. capabilities verticals For Industrial portfolio is as we focus unifying further optimization. that we growth

$XXX a growth million new customers emissions and million hydrogen, where towards year see add The $X from our about billion for this XXXX. we We to management. area energy Accordingly, CCUS, on remain in power, to we new technologies to target differentiated energy focus energy. new value geothermal growing orders our clean fourth in will path that $X excited billion $XXX is opportunities

Next, outlook our operational I'd you is like which OFSE continued detailed to for backlog we on update on well and drive Slide the business XX. segments, growth tailwinds margin to optimistic remain improvement. outlook the execution IET, given strong for business as each as both across and on X Overall, enhancements

$X.XX For an billion expect Hughes, be EBITDA and $X.XX $X.X Baker $X.XX fourth midpoint billion quarter billion. billion, and we and $X.X of between to revenue between billion implying EBITDA

ranges we full narrowing For $X.X and guidance. we to billion quarter quarter between billion. the $XX.X year, results $X.X Accordingly, between flow expect increasing be fourth revenue we and and through Hughes Baker XXXX are our third $XX.X now and and as EBITDA guidance billion billion

aeroderivative and between expect this tightness Tech expect sequential quarter $X.X $X.X Gas will and we in Therefore, we and and and impact growth and billion supply revenue of range both Gas Gas of Tech chain between conversion year-over-year fourth revenue reflect driving Industrial $XXX IET, million. For for IET backlog pace factors Tech. EBITDA major quarter fourth the billion to equipment $XXX be in Tech. The results any million the

for orders, IET year full constructive revenue outlook for Our EBITDA. and remains

billion range IET from new expect Flowing For $XX.X billion year guide, quarter third our billion to between fourth expectations $XX.XX billion and quarter and now $X.X full between billion XXXX and billion. orders, of $X.XX increased upside through $XX.XX $XX revenue we the billion a we've EBITDA $XX.X to $XX.X to billion.

in and international $X.XX revenue results OFSE, fourth America. typical quarter a year-end billion conversion We, expect and fourth projects, include to growth EBITDA and cost-out initiatives. Factors driving therefore, product $XXX the this pace in For million. quarter the between sales, North pacing our level decline between of of $XXX we expect reflect SSPS year-end of backlog billion and OFSE some $X.XX revenue and international the million range

fourth EBITDA the year full billion including guidance, $X.XX third now and and and forecast billion quarter revenue between $X.XX we quarter and After $XX.X between billion $XX.X billion. results OFSE

quarter We will provide alongside detailed in fourth results January. XXXX guidance our

continued next Looking for further remain out across IET OFSE well increasing to both as we operational to drive as and margins optimistic year, and enhancements growth returns.

navigating and on broader aeroderivative XXXX. challenges We as into uncertainty also geopolitical remain head and we chain focused supply macroeconomic

broadly, areas costs removing we're to More identifying continues, in we're progress modernizing journey pleased and drive business the and with our transformation how efficiencies, the making operates. structurally

transformation see further through continuing We to performance we efforts. see enhance and operating our the come continued results, our cost to outperformance are operating opportunities through business

remain remain focused we EBITDA on delivering for XX% OFSE XX% OFSE in IET. of set summary, in and and targets our we've targets to margins XX% IET XXXX XXXX, for achieving in committed In and relentlessly for we the ROIC

remain are these continuing achieve take Overall, Importantly, Hughes. targets. future about excited and to us we we Baker to today of help actions the exceed

call the Lorenzo. to over turn I'll back

Thank you, Nancy.

enhance organization we time a we energy company, about we horizons. position for across remain X our As continued growth encouraged leading our the technology our that see as

likely our transition unique to a many quickly While energy energy longer growing is there of benefit the expected, transition set the that portfolio is develops. take irrespective will than consensus how

quicker traditional Accordingly, and grow energy transition energy For unfolds. to transition irrespective is nature strategy of set portfolio, less in Hughes our experience growth solid the example, the we a across to becoming Baker of energy drives pace. gas pace balanced slower irrespective therefore that out the transition of transition energy this businesses. the cyclical have Considering Climate oil business, would a Solutions and faster extend while our a set Technology growth cycle

shareholder back which parallel are to enable and foundation more earnings today growth increasing to over in will laying us best-in-class and profile, for the deliver flow call cash turn we durable a structurally the Chase. Importantly, free that, returns. With performance I'll

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

Jayaram come Instructions] our JPMorgan. [Operator first Arun of from will And question

the beginning order guidance. the of order IET Lorenzo, raised the its outlook than $X I billion. IET with has year, wanted guidance more Baker Since start and by to

and you year? higher the So thoughts the and you taking the of drivers I XXXX questions some XXXX orders this this inbound one of could wondering about of of talk is, that the just some year was if because timing of on the accelerate are into

and you I hear we've of Arun, back we pipeline the as think you. definitely, from IET. that the gone and to pipeline if the of opportunities has more go year, always that And stronger of good get Yes, through said forward to been stronger a beginning we converting. the saw for And robust year, has continued to and

us given out able a it's plays at really our it so in X you at billion $XX.X as correctly, orders. guidance IET to opportunity on be And to as $XX look stands And the now range said the really billion. activity areas levels. take to up it you of And the

The first LNG. is

robust, this with with seen projects also facility. you as a of the that Gas that You've LNG ADNOC of agreement, saw uptake moved Venture continues to quarter have and and the the number be Ruwais forward there's Global the been

So as continuing very the also see the $X.X from to and on And the side. pleased used in BRUSH fourth the equipment LNG billion being our we still orders, booked LNG more we quarter, good uptake electric division and of motor the well. uptake to see expect in electrification and

So one LNG. is

a FPSO expect to and see continue good continuing fourth to see onshore/offshore we the production a the The larger with be and that second case quarter with and we better that's strength orders than also in the activity. offshore to trending expected,

area to Energy. quarter, and you be had last in We end to forecast the the to million. the at in see at see through of taken fourth $XXX the can third quarter. the $XXX still We by million million already the And we're coming $XXX of a that to We've $XXX year it New orders million. at up start expect

So to the still million $X at billion. end that million the billion $X and $XXX confident remain good of about the on feel $XXX decade to being very

IET be as we we'll see a look of update able strength those we strength areas in to an And perspective. overall opportunities. look, X out But continued in good further from XXXX, opportunities. to there's And good and X the to in project a cases, January. you So of number obviously continue pipeline

Great.

brownfield follow-up. opportunities Slide gave wondered a I just fulsome little about bit LNG. versus terms next that greenfield, versus you us you modular on versus build. in international, What stick on a U.S. Just see Lorenzo you Coast of Gulf you over a months, update emerging But the if seeing the of could pipeline the XX XX are Baker? X, talk to for pipeline

continuing of about XX MTPA to gas of XX the role see all you fuel, to going 'XX we think you play of LNG of installed by as do to XXXX XX that mentioned XX MTPA and that definitely also FIDs about that MTPA. 'XX, capacity XXX feel about into need And see and And an We've as look going get we've above. booked also stated we you FID. it's good at happened the Yes, XX projects think before. that's some of we We've XXXX and had a set LNG what continuing FID. a we at is in natural destination orders the to and because good go as transition of that 'XX MTPA as we 'XX rates obviously There's and prior FIDs. MTPA. we previously, But in of

international, we're both across when think greenfield, look board. seeing brownfield, you at America, I North the activity And

projects, greenfield U.S. and gas brownfield, the have that it of the the number associated has about made reserves Cheniere both obviously, also unique a comments a gas think, opportunity and and Global natural I Venture with has their activity.

other again, are projects working You towards new in Mexico. there that, some as know projects FID Tellurian. that There's are such

also then to But internationally, continuing strong. U.S. see be So you Qatar.

again, see, You also Canada.

the Africa I starting you're think as emerge see and ADNOCs world, well. You of to the with

have XXX positive. the that end to to need So that energy the at that sure day, make by And we towards the XXXX I remain world. meet we very MTPA it's all think of of the we demands

Our Piper Sandler. next Lemoine Luke comes from question with

the technical about Sorry issues.

good. All

But there I out have with end the well. results this understand us that upside you managing pretty with guide, this could XQ us and on what after the of IET. even concerns impact could months at improves? next process what's IET and came chain could your aeroderivative incorporated how about the in maybe supply you've already the error been and Your some going on in XX you refresh derivative guidance, help the unfolding know tightness be this over top the the of see

we that and and others chime challenging in. aerospace across supply we Yes, let is aerospace I'll here will industry. from factored with then as I that the we're it, about have to much that a the to this you heard able as monitor consequences. year, any forward. chain, we mentioned this it beginning And we in being of good that and reported at off sure we've the Luke. chain feel at kick also And start as And Nancy we supply think possible that continuing also make results closely go to the continue the and mitigate navigate work do

to other X/X motors, see about rotating equipment, robust note, it is also gas the heavy-duty about when and we turbines think then LNG is continue think aeroderivative, important is of chain the our availability electric there. I you to supply but and

continuing and it. it through working an on eye to we're So keep

guidance are very with And a with have we'll bake and in as challenges towards timing will certainly this previously carefully We're provided. considered we I start we'll to considered to chain is the supply so Yes. our XXXX. that within improvements, line terms it vendor But see guidance in. that the still of And -- the be then is contemplated in certainly sight said when also those in working we improve. XXXX

with from Our next comes Evercore question ISI. James West

horizons out you're something that has it? curious much a the X how kind different that laid I and wanted strategy talked September, is it on going I informing to of more how the How know about overall about It's And this thinking in about. the your Baker? for but kind I -- informed strategy view how the now you've of of you're informs touch strategy. detailed and forward was we horizons how it thinking So

clear have evolved, and thinking time, reveal now how and has And it to monitoring Definitely. starting that really externally. some we've and time to also been the to And I given markets horizons. really want more we're it be working through for rise strategy on we've this the that been been and detail X energy our

through the the horizon, is assets, our look focused simplification, so making that XXXX, people of really which first at sure And we the enhance through goes discipline, time optimization operational you on this productivity. efficiencies, accretion as margins

segments that the and energy mentioned as technology relative the that well we an LNG of as control from a really to before, as our our the that in X company growth cycle we spending. tailwinds we've All upswing macro across in see are business benefiting create things upstream multiyear

and will focus going first horizon, 'XX and margins accordingly our and underpin that's XX% goals manage also be IET the by OFSE in key EBITDA by So we'll to it get during through the to to that. 'XX,

through We'll energy the Gas have 'XX, and The a goes growth and industrial shifting benefit Tech phase the in to sectors. new the the this out is really horizon second Services of to of next expanded to focus growth customers. through base applications our the have efficiency installed digital to the be and coming will opportunity our we that to also provide and Leucipa, fruition that Cordant the

orders Energy. So the stated driving then you to above our the of for $X $X whole as margin with And And become expansion helping respectively. And OFSE across what the for component and energy solutions, really the by get ROIC to time mentioned that. a frontiers the targets the and the and to initial and XQ billion go transition get in New margin orders, million; XXXX, XX% really the hydrogen, decarbonization also critical targets year-to-date is geothermal at XX% you're segments. company signs we of opportunity which CCUS, see through this billion really we and IET, new exceed to X is we XXXX, our clean power, we the but further starting beyond $XXX energy EBITDA the as in to think XX%

on And factor. executing lays that associated with way it. in And this the the X emissions operational key focused discipline so out be will really really which towards we're horizons and management a

Okay. then just And Right. Makes quick complete follow-up, Lorenzo. sense. maybe a

last Energy orders much this have On year been stronger year. the New obviously, side, than

the broadly, DOE there's New to you're announced your Energy year flow the of just You're a year. Hubs lot today. in hydrogen to Hydrogen in But likely this through the focused And target particular, announced that for awards I'm but already program recently hydrogen maybe of on or seeing kind what in to more given hubs. hydrogen curious activity

and we've important And James. we orders $XXX Definitely, up that Baker in. in to which the And is and And expect equipment comes from between to XXXX, $XXX taken stack. the New we're as today, with be million this are for million. technology look, we're aspect it you've Hughes is coming very target our producing way pleased said, one Energy the existing

the you invest the that so anticipated look X States. done. billion the you States, hydrogen stream, at coming in most at history of ERA, grants faster particular, mentioned, feel new able than to when as ourselves. in a being opportunity DOE long -- in United you coming about growing. hubs you energy you hydrogen. of in is to And continuing at we Europe the good look also policies And at to recently, on has And we've areas And That got $X United awarded what are look and hydrogen look in we're differentiate transition. And we is in actually the

new with to with again You've to expect the these with seen with being we equipment continue. And that facilities, our that had extend hydrogen the we've the associated that Air to the Products successes hubs, can opportunity and able we them provide got technology opportunity them. we've provide hydrogen and

focus to we So an going hydrogen be going forward. continue as of Baker for that area Hughes feeling good is

technical question the Citigroup. for with [Operator Our from apologize difficulties. Scott next comes Instructions] We Gruber

for XX% the about ask EBITDA to want margin I target IET.

at just currently And looking or realized big about XX.X% restructured years a next it's you for the to consensus but X 'XX year. so, business, jump. from Your I in XX% in XX% stands going at

on level the and XX% the your you in So margin confidence of color 'XX? segment expansion some achieving provide can the by in just drivers overall more

that's Yes, the really sure. target. is It's say EBITDA our mix, a would great margin question, -- given to and mix the how that's biggest strong the the variable of sort pipeline of is last the in orders driver the and published headwind our since September. I targets we really

that margin continue installed publicly Services margin base, the as targets. it's sort a higher expand we of the while And services percentage than we've revenue much to said So a the is of the pushing equipment.

So operate progress and be how how when you at think efficiently. continued we leaner, the it's doing we about cost XX% margin, segment drive on can thinking that we're our transformation process the more to can to things level, really out

believe You'll to chip the that Tech also and the Services improvement margins space. in the certainly, supply see is of continue to slower aviation then and and XXXX. And ramp Industrial year this R&D have making we other abate the to is to we for costs decade. of will absorbing we're we Tech think in which remember that Climate the piece the issues, start half as supply Tech shortages really the continued in chain And normalize chain investments into the about then back additional impact Gas been

So the But our get all to around attain will growth, confident line of transparency to to with very XX% we XX%. those work sight more, see in to top towards the for definitely and we strong we and of we see continue line but those a to how margin. together, pass are things ability margins, allow the us

of the 'XX is we'll that. a headwind appreciate from with to equipment 'XX, bit back 'XX the I with 'XX to what it as see And going going is about linear expansion from Nancy? 'XX 'XX? mix weighted growth, than to more a from to expansion, 'XX think just more all the we expansion margin Or because

Yes.

will bit in. think can't the ramp necessarily part predict and up, the the I is gradual pop and of where will orders equipment it you'll a we but be little a lumpy see pace the revenue services

you'll to where guidance. those with to continue will and that hard It's occur. right. to say the trajectory But to see a would exactly to I will of say provide line So we gains up bigger sight continue our

Our from comes [Operator Barclays. next Instructions] Dave question Anderson with

conversion I'm If it's seems little kind could, you, bit side. you something want just about ask like to Last like like if Nancy, righted it I I the a going Gas It with Tech it last year, backlog conversion Equipment quarter. of please. of slower. we be overall to was stick to quarter, the XX% Great. backlog. will compared year-end this XXXX compared look to

might next the that wondering about should things over we Just conversion trending should how this about hand, see little includes just Are I you But of talk year change doing speed you that Can of there's orders rate up other X? or on conversion? think that how internally think also kind the a backlog mix how and that progressing? a that bit. you

take that additional a look, you you dramatic the Again, Kaizens projects, as a sure that they the intake between working imagine, the been it on we've normally had, intake about And good the that and to from look we a have, months out also one. cycle orders actual and can on change. processes and the LNG different won't from conversion, around. From shops see with time this take we've the in the that installation. large I'll also turn if XX ability take perspective at got XX to and to Dave, making manufacturing we've orders lean you feel we of very

the case. meeting making we're we're And on that sure customer definitely, But focused will so remain that the commitments.

a complex from And there's of you that more is earlier pulling longer, Lorenzo, than is We of energy CCS expected. side. well. a is that said yesterday you many made consent announced back growing that just they're saw statement the pivoting the that away transition BP taking kind as some Shell

complexities views. just in if of you've EIT business a that as [ You change driving in you're than what's to either the -- well. There's longer Do thought? wrote also if you about of this some way IET as But kind I'm those that? kind kind you've in ]. way now wondering LNG (sic) of of talked you kind interesting think release highlighted, upstream longer-term and had And any initially made you you statement in could technology and benefit runway has that unpack of of you you in

in we're to supply be energy the the that. an given Dave. was needs to it should Look, and as the use see that ultimately, of time some to adoption emissions I And definitely be also and but more complicated. think, And that across of segments always going parallel associated destination. needs the to think of is, change there going we're the the known there. cleaner continuation There's And going to what that happen growing with it it the going that think it's overnight. of that. we're both and And economy to the focused oil our the to transition take business and an is going population that. well we're we're mentioning developing be Yes, we see that with growing doesn't eagerness see becoming I of management. And that I We've going activity reality on be adoption and CCUS, towards gradual, is continuing here low-carbon gas, everybody it's see is to world to said a

we unique So the of benefit. again, we're have opportunity in where position I transition, speed irrespective a, think, the of the to

comes question with next Hallead from Benchmark. [Operator Instructions] Our Kurt

a a to number the kind the just have opportunities of different are bit growth that little to outline may technologies used to of that the earlier fact some you have to maybe on you and be of to New maybe kind going early occasions. market. I into And follow tap Lorenzo, existing wanted the referenced questions to around business Energy of on that

a you to to you how billion get think to you to amount profile so. a kind can you the want from years substantial next order have are $X growth Do in you of Do intake on X internally? what a course and of about that. $X confident So the billion? you comfortable to or of deliver you XXx execute -- Just as got kind that invest over maybe sense and

base. turboexpander billion and, with you've them within very and comfortable. opportunity $X you And generation, power to hydrogen actually, this with increased as seen linked $X And a year feel we the big and example, closely It's expenditures application space. just preparing for the future look we we've as in the it's think again, see R&D for obviously compression. and have Kurt. Yes, Power, regards billion within also investing. that And I to and at are growth NET our clean of associated compression not we And the been that

You turbines are we look be that have -- that at gas can hydrogen-ready. our already that

think or taking the I engineering and ready development large So with in go we're already that's place. got we've complement equipment research a the either associated seeing of to already aspect the actually And that's the opportunities what of further just European in the some Middle flow also of with orders And East. you're seeing the and about. ERA, pipeline it's and come reinforced further also with policies reinforced of

$X opportunities billion many also and that it. and we to as with our feel So go $X billion comfortable on opportunity forward to convert

for a and dividend Okay. gauge Appreciate maybe color. you And preference Nancy then capital How between share follow-up on that do allocation. the repurchase?

Yes.

So to work goes. go is in this will get the buyback range. share would increase at dividend we'll And to XX% be of back I will over the it think time. The would dividend to point, about XX% returns XX% committed to the business we've that to how shareholders. I opportunistic to somewhere How as structurally about is it the XX% think

opportunistic be will add-on the that So dividend. to the

be to dividend business secular that we more we'll and as of time Our business, more get stability, pivot certain linearity grow from sincere over able structure, as is especially growth. and goal parts nature in the the of we away cyclical the

to return holders. goal, to committed So that's XX% the XX% the but we remain still very to

with TD Our next Cowen. question comes from Marc Bianchi

next mid-teens just you concern you're and maybe takes Or to if is that I comment some even had digits spending be investor thinking that on a mid-teens be you that, think or Could for double achievable? the upstream seeing solid international how an expectation think stretch any outlook you There's spending. might about? year. other puts growth for mentioned

oil activity, the And going Yes. if the if international in to that year next at side, continuing West spending good into think look D&C see East this on as anticipated Guyana, you to And national Brazil, to robust. by Again, about the the have digit. the year, And Latin companies, next with feel at continues at of if we you Middle offshore be uptick, Africa. And as mid-teens. we've announced it's look at spending the double various you said America look that's look you double-digit year, and still plans also the been again, we activity. with be

great. That's Okay.

was other I LNG had on The service. question

installed that So what for get laid and out mean opportunity. service mean how about base the so Services today the you growth could Tech a that could we growing for sense much you could talk LNG the comes service, Gas just of Can business? from what of

Yes.

about and look our for Services also the at business As of accounts LNG XX% service. you again,

all LNG of pipeline, But on We as installed applications et the have other XX%. as about services cetera. of in areas on our well equipment downstream onshore-offshore transactional specifically, the

you Thank for session. the This on today's sincerely experienced conference. for your the concludes difficulties apologize conclude participation program. you. we today's Again, Thank question-and-answer in the call. does That technical

may You disconnect. now