Baker Hughes Inc. (BHI) reported first-quarter 2010 earnings of 41 cents per share, compared with the Zacks Consensus Estimate of 38 cents and year-ago earnings of 81 cents.
Though the results came in above our expectations, it was down year over year, due primarily to price deterioration in international businesses. However, with the improvement in pricing and customer spending, the company is expecting a better margin environment ahead. In addition, Baker Hughes will also benefit from the recently completed merger with BJ Services.
Revenue from Baker Hughes’ oilfield operations was $2.54 billion, down nearly 5% year over year but up 4.6% sequentially. Pre-tax operating profits decreased 27% year over year but increased more than 14% sequentially to $277 million. Pre-tax operating margin for the quarter was 11%, compared with 14% in the year-ago quarter and 10% in the previous quarter.
Of the total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 41%, 30%, 18% and 11%, respectively.
Revenue from the Drilling and Evaluation segment decreased more than 5% year over year and increased 9% sequentially to $1.24 billion. The segment’s pre-tax operating profits were down 33% year over year and up 76% sequentially. Pre-tax operating margin in the quarter was 8%, compared with 12% in the year-earlier quarter and 5% in the previous quarter.
In the Completion and Production segment, revenue was down 4.4% year over year and slightly up sequentially to $1.30 billion. The segment’s pre-tax operating profits decreased 23% year over year and 4.3% over the previous quarter, while pre-tax operating margin was 14%, compared with 17% in the year-earlier quarter and same in the previous quarter.
At the end of the quarter, Baker Hughes had $1.61 billion in cash and cash equivalents, while long-term debt stood at $2.02 billion, representing a debt-to-capitalization ratio of 21.6%. The company spent $246 million on capital expenditures during the reported quarter.
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