BKR.NASDAQBaker Hughes CO
DEF: Baker Hughes Reports Strong 2024 Performance and Outlines 2025 Meeting Agenda
Sentiment:
Proxy Statement
Baker Hughes announces strong financial results for 2024, including increased orders, revenue, and adjusted EPS, while also detailing the agenda for the 2025 Annual Meeting of Shareholders.
Better than expectedThe company achieved better than expected results in orders, revenue, adjusted EPS, and free cash flow.The company achieved better than expected results in adjusted EBITDA and adjusted EBITDA margin.The company achieved better than expected results in new energy orders.
Summary
- Baker Hughes reported strong financial performance in 2024, with $28.2 billion in orders and $27.8 billion in revenue.
- Adjusted earnings per share (EPS) increased by 47%, and free cash flow reached $2.26 billion.
- Adjusted EBITDA increased by 22%, with EBITDA margins up 1.7 percentage points to 16.5%.
- The company secured $3.3 billion in liquified natural gas (LNG)-related orders.
- New energy orders crossed the $1 billion mark, tripling awards since 2021.
- The company is confident in achieving its 2030 new energy orders target of $6 billion to $7 billion.
- The 2025 Annual Meeting of Shareholders will be held virtually on May 20, 2025.
- Shareholders will vote on the election of directors, an advisory vote on executive compensation, and the ratification of KPMG LLP as the independent registered public accounting firm for fiscal year 2025.
- Ahmed Moghal was appointed as Executive Vice President and Chief Financial Officer effective February 24, 2025.
- Shirley A. Edwards was appointed to the Board effective May 22, 2024.
- Dr. Ilham Kadri will be appointed to the Board effective May 1, 2025.
- The company reduced Scope 1 and 2 GHG emissions by 28.3% compared to the 2019 base year.
Sentiment
Score: 8
Explanation: The document presents a positive outlook with strong financial results and strategic advancements. The company is confident in its future performance and commitment to shareholder value.
Positives
- Strong financial performance in 2024, with increased orders, revenue, adjusted EPS, and free cash flow.
- Significant growth in new energy orders, positioning the company well for the energy transition.
- Commitment to sustainability, with a reduction in Scope 1 and 2 GHG emissions.
- High shareholder support for the executive compensation program, with 95.2% approval in the 2024 advisory vote.
- Addition of experienced leaders to the executive team and Board of Directors.
Risks
- The global energy landscape continues to evolve, creating uncertainty for future performance.
- The company faces operational, financial, strategic, and reputational risks that affect every segment of its business.
- Cybersecurity threats and data privacy concerns require ongoing vigilance and investment in security measures.
Future Outlook
Baker Hughes is focused on continuing its momentum, with EBITDA expected to demonstrate another year of solid growth in 2025. The company remains confident in its ability to achieve its 2030 new energy orders target of $6 billion to $7 billion.
Management Comments
- Lorenzo Simonelli, Chairman, President and Chief Executive Officer: '2024 was another year of strong execution and financial performance for Baker Hughes.'
- Lorenzo Simonelli: 'Our diversified portfolio of energy and industrial technologies, combined with our disciplined financial approach, has allowed us to maintain a strong balance sheet, invest in innovative solutions for our customers, and enhance long-term shareholder value.'
- Lorenzo Simonelli: 'With our strong portfolio, disciplined execution, and unwavering commitment to innovation, we are confident in our ability to drive another year of progress in 2025.'
Industry Context
Baker Hughes is positioning itself as a leading energy technology provider, particularly in the liquified natural gas (LNG) sector, where demand is expected to grow significantly. The company is also investing in new energy solutions to capitalize on the growing need for lower-carbon energy technologies.
Comparison to Industry Standards
- Baker Hughes' performance is benchmarked against a Compensation Reference Group of 26 companies, including industry peers and companies in the broader energy and general industry sectors.
- The company's long-term performance is assessed through Performance Share Units (PSUs) based on the companies in the OSX index (plus TechnipFMC) each year to align with the wider portfolio of Baker Hughes.
- The FCF conversion metric is measured against the OSX index and TechnipFMC, and the TSR modifier is measured against OSX Index, TechnipFMC and S&P 500 Industrials index (median performing company).
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Executive Vice President and Chief Financial Officer | Nancy Buese | Ahmed Moghal | 2025-02-24 | |
| Board Member | Lynn L. Elsenhans | Ilham Kadri | 2025-05-01 | Lynn L. Elsenhans has notified the Board of her decision not to stand for re-election at the 2025 Annual Meeting. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Insider Trading Policy Update | Updated insider trading policy to address latest developments in securities law compliance and corporate governance. | ||
| Director Training Plan | Created a formal director training plan and, on a biannual basis, directors receive training on various matters of company and shareholder importance, including, for example, on artificial intelligence and cybersecurity |
Related Party Transactions
- Elisa de Castro Barbosa, an immediate family member of one of our executive officers, is employed by us as a Senior HR Manager and received approximately $280,000 in total compensation in 2024.
- Judit Prieto Matesanz, an immediate family member of one of our executive officers, was previously employed by us as SVP Enterprise Solutions, Customer Experience and Projects and received approximately $1,183,000 in total compensation in 2024.
- Ms. Prieto Matesanz will receive a cash separation payment of approximately $1,300,000 from the Company in July of 2025.
Stakeholder Impact
- Shareholders: Strong financial performance and commitment to shareholder returns.
- Employees: Commitment to diversity, inclusion, and safe workplace.
- Customers: Focus on providing innovative solutions and sustainable energy development.
- Communities: Charitable work and community service through the Baker Hughes Foundation.
Next Steps
- Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
- The company will continue to execute its strategy to drive profitable growth and continuous margin improvement.
- The company will continue to invest in new energy solutions and reduce its carbon footprint.
Key Dates
| Date | Description |
|---|---|
| 2017-07-01 | Company formed as a result of a combination between Baker Hughes Incorporated (BHI) and the oil and gas business (GE O&G) of General Electric Company (GE). |
| 2018-12-31 | Effective date for transfer of Baker Hughes Supplementary Pension Plan fully funded by GE. |
| 2019 | Announced commitment to reduce Scope 1 and 2 carbon dioxide equivalent emissions from operations by 50% by 2030 and achieve carbon dioxide equivalent net-zero emissions by 2050. |
| 2020 | Reset carbon emissions reduction base year from 2012 to 2019. |
| 2022-12-31 | GE exchanged all of its Class B Common Stock and equity interests representing its economic interests in BHH LLC for shares of our Common Stock. |
| 2023-03-01 | Board updated the Company's governance documents, policies, and procedures to eliminate requirements relevant to the period when the Company was affiliated with GE. |
| 2023-10-01 | Baker Hughes adopted the Baker Hughes Recovery of Compensation Policy. |
| 2024-05-13 | 2024 Annual Meeting. |
| 2024-05-22 | Shirley A. Edwards appointed to the Board. |
| 2024-08-24 | Ms. Judit Prieto Matesanz and the Company entered into an agreement relating to the termination of Ms. Prieto Matesanzs employment relationship with the Company. |
| 2024-09-01 | Amerino Gatti appointed as Executive Vice President, Oilfield Services & Equipment. |
| 2024-09-01 | Maria Claudia Borras appointed as Chief Growth & Experience Officer. |
| 2024-12-31 | Ms. Prieto Matesanzs employment with the Company ended. |
| 2025-01-01 | Changes to non-employee director compensation become effective. |
| 2025-02-04 | Annual Report on Form 10-K filed. |
| 2025-02-24 | Ahmed Moghal appointed as Executive Vice President and Chief Financial Officer. |
| 2025-03-24 | Record date for determining shareholders entitled to notice of, and to vote at the 2025 Annual Meeting. |
| 2025-03-31 | Date of notice of 2025 Annual Meeting of Shareholders. |
| 2025-04-01 | A Notice of Internet Availability of Proxy Materials will be mailed on or about this date. |
| 2025-05-01 | Ilham Kadri appointed to the Board. |
| 2025-05-20 | 2025 Annual Meeting of Shareholders. |
| 2025-06-30 | Freudenberg has publicly announced that Dr. Sohi is retiring as its Chief Executive Officer. |
| 2025-07-01 | Ms. Prieto Matesanz will receive a cash separation payment of approximately 1,300,000 from the Company. |
| 2026-05-01 | Annual Meeting expected to be held in May 2026. |
Keywords
Baker Hughes, Annual Meeting, Executive Compensation, Financial Performance, Sustainability, Board of Directors, EBITDA, EPS, Free Cash Flow, New Energy, LNG, Governance
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