8-K: Baker Hughes Announces Changes to Income Statement Presentation

Baker Hughes will modify its income statement presentation in the first quarter of 2025, separating research and development costs and removing the operating income subtotal and non-operating income (loss) line item.

Summary

• Baker Hughes Company will change its income statement presentation starting in Q1 2025.
• The changes include separately presenting research and development costs.
• The sub-total of operating income and the non-operating income (loss) line item will be removed.
• These changes will not impact historically reported consolidated or segment financial results.
• The company has provided unaudited historical consolidated financial information retrospectively adjusted to reflect these changes in a Financial Supplement.
• The Financial Supplement is furnished as Exhibit 99.1 to the Current Report on Form 8-K.
• The company's total revenue for 2022 was $21,156 million, for 2023 was $25,506 million, and for 2024 was $27,829 million.
• Net income attributable to Baker Hughes Company was $(601) million in 2022, $1,943 million in 2023, and $2,979 million in 2024.

Sentiment

Score: 7

Explanation: The announcement is neutral to slightly positive. The changes in presentation are not expected to impact financial results, and the company is providing additional transparency regarding R&D costs. The historical financial data shows improving revenue and net income.

Positives

• The company's total revenue increased from $21,156 million in 2022 to $27,829 million in 2024.
• Net income attributable to Baker Hughes Company improved from $(601) million in 2022 to $1,943 million in 2023, and further to $2,979 million in 2024.

Future Outlook

The company intends to implement these changes in the presentation of its income statement in connection with its forthcoming Form 10-Q for the fiscal quarter ended March 31, 2025.

Industry Context

Changes in financial statement presentation are not uncommon, especially as companies grow and evolve, or as accounting standards change; this change provides more transparency into R&D spending.

Comparison to Industry Standards

• Baker Hughes' decision to separately present research and development costs aligns with industry best practices for enhanced transparency.
• Companies like Schlumberger and Halliburton also provide detailed breakdowns of their R&D expenses, allowing investors to better assess their innovation investments.
• The removal of the operating income subtotal and non-operating income (loss) line item is less common, but may be justified if management believes it simplifies the income statement and provides a clearer picture of the company's core operating performance.

Stakeholder Impact

• Shareholders will see a change in the presentation of the income statement, with more visibility into R&D spending.
• The changes are not expected to impact employees, customers, suppliers, or creditors.

Next Steps

• Baker Hughes will implement the changes in its Form 10-Q for the quarter ended March 31, 2025.

Key Dates

Keywords

income statement, financial presentation, research and development, operating income, non-operating income, financial results, Baker Hughes