Baker Hughes Inc. Earnings: Snaps Strong Streak with Profit Drop

Rising costs hurt S&P 500 (NYSE:SPY) component Baker Hughes Inc. (NYSE:BHI) in the fourth quarter as profit dropped from a year earlier. Baker Hughes provides products and services for the drilling and evaluation of oil and gas wells as well as fluids and chemicals and reservoir technology.

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Baker Hughes Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the oil and gas equipment and services company fell to $314 million (72 cents per share) vs. $335 million (77 cents per share) a year earlier. This is a decline of 6.3% from the year earlier quarter.

Revenue: Rose 21.8% to $5.39 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BHI reported adjusted net income of $1.22 per share. By that measure, the company fell short of mean estimate of $1.33 per share. Analysts were expecting revenue of $5.47 billion.

Quoting Management: Martin Craighead, Baker Hughes President and Chief Executive Officer, said: “We are pleased with our international margins of 16% in the fourth quarter (excluding the impairment of certain trade names), with contributions across all regions. Our business continues to improve and we benefited from increased activity, a favorable product mix as well as typical seasonal product sales. For 2012, we expect international growth to continue, particularly in the Latin America, Middle East, and deepwater markets.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 49.9%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 82.2% from the year earlier quarter.

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the third quarter, net income rose more than twofold from the year earlier, while the figure increased more than threefold in the second quarter, more than twofold in the first quarter and more than threefold in the fourth quarter of the last fiscal year.

The company has now fallen short of estimates in the last two quarters. In the third quarter, it missed expectations by 3 cents with net income of $1.18 versus a mean estimate of net income of $1.21 per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from $1.37 a share to $1.30 over the last ninety days. At $4.31 per share, the average estimate for the fiscal year has fallen from $4.37 ninety days ago.

Competitors to Watch: National-Oilwell Varco, Inc. (NYSE:NOV), Weatherford Intl. Ltd. (NYSE:WFT), Newpark Resources, Inc. (NYSE:NR), Halliburton Company (NYSE:HAL), Flotek Industries, Inc. (NYSE:FTK), Oil States Intl., Inc. (NYSE:OIS), Schlumberger Limited. (NYSE:SLB), Bolt Technology Corp. (NASDAQ:BOLT), Cameron Intl. Corp. (NYSE:CAM), and Lufkin Industries, Inc. (NASDAQ:LUFK).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com