Baker Hughes’s earnings took a step forward
In this part, we’ll analyze the 1Q18 net income for Baker Hughes, a GE Company (BHGE), and National Oilwell Varco (NOV). In 1Q18, Baker Hughes’s reported net income was $70 million—126% higher compared to the net income in 4Q17. The comparable net income figure in 1Q17 wasn’t available. In 1Q18, Baker Hughes’ss net income was impacted by various charges including $162 million in restructuring, impairment, and other charges, $46 million in merger and related costs, and a $61 million inventory impairment charge.
Despite the above charges, an increased share of higher margin products, synergy realization following Baker Hughes’s merger with GE’s oil and gas business, higher order in the Turbomachinery & Process Solutions and Oilfield Services segments, and volume growth and strong cost productivity in the Digital Solutions segment primarily led to positive earnings in 1Q18.
National Oilwell Varco’s net loss softened
In 1Q18, National Oilwell Varco’s reported net loss was ~$68 million. So, National Oilwell Varco cut its reported net loss compared to its net loss of $122 million in 1Q17. National Oilwell Varco’s operating income, expressed as the adjusted EBITDA, improved in 1Q18 compared to 1Q17 due to the improvement in the Wellbore Technologies segment. Compared to 4Q17, National Oilwell Varco’s net loss deteriorated more in 1Q18.
National Oilwell Varco accounts for 5.8% of the iShares U.S. Oil Equipment & Services ETF (IEZ). IEZ tracks an index composed of US equities in the oil equipment and services sector. IEZ fell 1%, while National Oilwell Varco increased 14% in the past year. To learn more about National Oilwell Varco’s 1Q18 earning, read National Oilwell Varco’s 1Q18 Results Disappoint.
Next, we’ll compare Baker Hughes and National Oilwell Varco’s capex after 1Q18.