bkr-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________to__________

Commission File Number 1-38143


Baker Hughes Company

(Exact name of registrant as specified in its charter)


Delaware		81-4403168
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

575 N. Dairy Ashford Rd., Suite 100
Houston,	Texas	77079-1121
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (713) 439-8600

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	BKR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of April 18, 2024, the registrant had outstanding 997,997,634 shares of Class A Common Stock, $0.0001 par value per share.

Baker Hughes Company

Table of Contents


		Page No.
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income (Loss) (Unaudited) - Three months ended March 31, 2024 and 2023	1

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three months ended March 31, 2024 and 2023	2

	Condensed Consolidated Statements of Financial Position (Unaudited) - March 31, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Changes in Equity (Unaudited) - Three months ended March 31, 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) - Three months ended March 31, 2024 and 2023	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	33

Item 6.	Exhibits	33

	Signatures	34

Baker Hughes Company 2024 First Quarter Form 10-Q | i

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Baker Hughes Company

Condensed Consolidated Statements of Income (Loss)

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share amounts)	2024		2023
Revenue:
Sales of goods	$	3,999	$	3,484
Sales of services	2,419		2,232
Total revenue	6,418		5,716

Costs and expenses:
Cost of goods sold	3,401		2,982
Cost of services sold	1,739		1,585
Selling, general and administrative	618		655

Restructuring, impairment and other	7		56
Total costs and expenses	5,765		5,278
Operating income	653		438
Other non-operating income, net	29		386
Interest expense, net	(41)		(64)
Income before income taxes	641		760
Provision for income taxes	(178)		(179)
Net income	463		581
Less: Net income attributable to noncontrolling interests	8		5
Net income attributable to Baker Hughes Company	$	455	$	576

Per share amounts:
Basic income per Class A common stock	$	0.46	$	0.57
Diluted income per Class A common stock	$	0.45	$	0.57

Cash dividend per Class A common stock	$	0.21	$	0.19

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2024 First Quarter Form 10-Q | 1

Baker Hughes Company

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended March 31,
(In millions)	2024		2023
Net income	$	463	$	581
Less: Net income attributable to noncontrolling interests	8		5
Net income attributable to Baker Hughes Company	455		576
Other comprehensive income (loss):

Foreign currency translation adjustments	(63)		(61)
Cash flow hedges	2		(1)
Benefit plans	2		7
Other comprehensive loss	(59)		(55)
Less: Other comprehensive loss attributable to noncontrolling interests	—		—
Other comprehensive loss attributable to Baker Hughes Company	(59)		(55)
Comprehensive income	404		526
Less: Comprehensive income attributable to noncontrolling interests	8		5
Comprehensive income attributable to Baker Hughes Company	$	396	$	521

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2024 First Quarter Form 10-Q | 2

Baker Hughes Company

Condensed Consolidated Statements of Financial Position

(Unaudited)


(In millions, except par value)	March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	2,717	$	2,646
Current receivables, net	6,873		7,075
Inventories, net	5,339		5,094
All other current assets	1,491		1,486
Total current assets	16,420		16,301
Property, plant and equipment (net of accumulated depreciation of $5,824 and $5,678)	4,931		4,893
Goodwill	6,114		6,137
Other intangible assets, net	4,055		4,093
Contract and other deferred assets	1,824		1,756
All other assets	3,067		3,043
Deferred income taxes	730		722
Total assets	$	37,141	$	36,945
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	4,595	$	4,471
Short-term and current portion of long-term debt	147		148
Progress collections and deferred income	5,711		5,542
All other current liabilities	2,726		2,830
Total current liabilities	13,179		12,991
Long-term debt	5,859		5,872
Deferred income taxes	149		176
Liabilities for pensions and other postretirement benefits	984		978
All other liabilities	1,420		1,409
Equity:
Class A Common Stock, $0.0001 par value - 2,000 authorized, 998 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	—		—
Class B Common Stock, $0.0001 par value - 1,250 authorized, nil issued and outstanding as of March 31, 2024 and December 31, 2023	—		—
Capital in excess of par value	26,610		26,983
Retained loss	(8,364)		(8,819)
Accumulated other comprehensive loss	(2,855)		(2,796)
Baker Hughes Company equity	15,391		15,368
Noncontrolling interests	159		151
Total equity	15,550		15,519
Total liabilities and equity	$	37,141	$	36,945

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2024 First Quarter Form 10-Q | 3

Baker Hughes Company

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


(In millions, except per share amounts)	Class A and Class B Common Stock		Capital in Excess of Par Value		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at December 31, 2023	$	—	$	26,983	$	(8,819)	$	(2,796)	$	151	$	15,519
Comprehensive income:
Net income					455				8		463
Other comprehensive loss							(59)				(59)
Dividends on Class A common stock ($0.21 per share)			(210)								(210)
Repurchase and cancellation of Class A common stock			(158)								(158)
Stock-based compensation cost			51								51
Other			(56)								(56)
Balance at March 31, 2024	$	—	$	26,610	$	(8,364)	$	(2,855)	$	159	$	15,550


(In millions, except per share amounts)	Class A and Class B Common Stock		Capital in Excess of Par Value		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at December 31, 2022	$	—	$	28,126	$	(10,761)	$	(2,971)	$	131	$	14,525
Comprehensive income:
Net income					576				5		581
Other comprehensive loss							(55)				(55)
Dividends on Class A common stock ($0.19 per share)			(192)								(192)



Stock-based compensation cost			49								49

Other			(58)						(1)		(59)
Balance at March 31, 2023	$	—	$	27,925	$	(10,185)	$	(3,026)	$	135	$	14,849

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2024 First Quarter Form 10-Q | 4

Baker Hughes Company

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In millions)	2024		2023
Cash flows from operating activities:
Net income	$	463	$	581
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	283		269
Gain on equity securities	(52)		(392)
Provision (benefit) for deferred income taxes	(24)		58
Stock-based compensation cost	51		49




Inventory impairment	—		18

Changes in operating assets and liabilities:
Current receivables	199		(332)
Inventories	(265)		(265)
Accounts payable	173		43
Progress collections and deferred income	170		639
Contract and other deferred assets	(68)		(148)
Other operating items, net	(146)		(59)
Net cash flows from operating activities	784		461
Cash flows from investing activities:
Expenditures for capital assets	(333)		(310)
Proceeds from disposal of assets	51		46




Other investing items, net	13		35
Net cash flows used in investing activities	(269)		(229)
Cash flows from financing activities:



Dividends paid	(210)		(192)

Repurchase of Class A common stock	(158)		—

Other financing items, net	(59)		(58)
Net cash flows used in financing activities	(427)		(250)
Effect of currency exchange rate changes on cash and cash equivalents	(17)		(55)
Increase (decrease) in cash and cash equivalents	71		(73)
Cash and cash equivalents, beginning of period	2,646		2,488
Cash and cash equivalents, end of period	$	2,717	$	2,415
Supplemental cash flows disclosures:
Income taxes paid, net of refunds	$	108	$	163
Interest paid	$	48	$	50

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Company 2024 First Quarter Form 10-Q | 5

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

Baker Hughes Company ("Baker Hughes," "the Company," "we," "us," or "our") is an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain.

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S." and such principles, "U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report").

In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state our results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries (entities in which we have a controlling financial interest, most often because we hold a majority voting interest). All intercompany accounts and transactions have been eliminated.

In the Company's financial statements and notes, certain prior year amounts have been reclassified to conform with the current year presentation. In the notes to the unaudited condensed consolidated financial statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. Certain columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Please refer to "Note 1. Basis of Presentation and Summary of Significant Accounting Policies," to our consolidated financial statements from our 2023 Annual Report for the discussion of our significant accounting policies.

Supply Chain Finance Programs

As of March 31, 2024 and December 31, 2023, $391 million and $332 million of supply chain finance program liabilities are recorded in "Accounts payable" in our condensed consolidated statements of financial position, respectively, and reflected in net cash flows from operating activities in our condensed consolidated statements of cash flows when settled.

NEW ACCOUNTING STANDARDS TO BE ADOPTED

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures.

Baker Hughes Company 2024 First Quarter Form 10-Q | 6

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which enhances the disclosures required for operating segments in the Company's annual and interim consolidated financial statements. ASU 2023-07 is effective retrospectively for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures.

All other new accounting pronouncements that have been issued, but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

NOTE 2. CURRENT RECEIVABLES

Current receivables consist of the following:


	March 31, 2024		December 31, 2023
Customer receivables	$	5,863	$	6,033
Other	1,336		1,392
Total current receivables	7,199		7,425
Less: Allowance for credit losses	(326)		(350)
Total current receivables, net	$	6,873	$	7,075

Customer receivables are recorded at the invoiced amount. The "Other" category consists primarily of advance payments to suppliers and indirect taxes.

NOTE 3. INVENTORIES

Inventories, net of reserves of $382 million and $389 million as of March 31, 2024 and December 31, 2023, respectively, consist of the following:


	March 31, 2024		December 31, 2023
Finished goods	$	2,575	$	2,626
Work in process and raw materials	2,764		2,468

Total inventories, net	$	5,339	$	5,094

During the three months ended March 31, 2023, we recorded inventory impairments of $18 million, primarily in our Oilfield Services & Equipment ("OFSE") segment. See "Note 17. Restructuring, Impairment, and Other" for further information.

Baker Hughes Company 2024 First Quarter Form 10-Q | 7

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 4. OTHER INTANGIBLE ASSETS

Intangible assets consist of the following:


	March 31, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	1,940	$	(836)	$	1,104	$	1,945	$	(818)	$	1,127
Technology	1,258		(921)		337		1,253		(899)		354
Trade names and trademarks	291		(189)		102		290		(186)		104
Capitalized software	1,437		(1,127)		310		1,413		(1,107)		306

Finite-lived intangible assets	4,926		(3,073)		1,853		4,901		(3,010)		1,891
Indefinite-lived intangible assets	2,202		—		2,202		2,202		—		2,202
Total intangible assets	$	7,128	$	(3,073)	$	4,055	$	7,103	$	(3,010)	$	4,093

Amortization expense for the three months ended March 31, 2024 and 2023 was $68 million and $63 million, respectively.

Estimated amortization expense for the remainder of 2024 and each of the subsequent five fiscal years is expected to be as follows:


Year	Estimated Amortization Expense
Remainder of 2024	$	190
2025	215
2026	170
2027	147
2028	126
2029	105

Baker Hughes Company 2024 First Quarter Form 10-Q | 8

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 5. CONTRACT AND OTHER DEFERRED ASSETS

Contract assets reflect revenue earned in excess of billings on our long-term contracts to construct technically complex equipment, provide long-term product service and maintenance or extended warranty arrangements and other deferred contract related costs. Our long-term product service agreements are provided by our Industrial & Energy Technology ("IET") segment. Our long-term equipment contracts are provided by both our IET and OFSE segments. Contract assets consist of the following:


	March 31, 2024		December 31, 2023
Long-term product service agreements	$	402	$	418
Long-term equipment contracts and certain other service agreements	1,271		1,184
Contract assets (total revenue in excess of billings)	1,673		1,602
Deferred inventory costs	128		126
Other costs to fulfill or obtain a contract	22		28

Contract and other deferred assets	$	1,824	$	1,756

Revenue recognized during the three months ended March 31, 2024 and 2023 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $(1) million and $1 million, respectively. This includes revenue recognized from revisions to cost or billing estimates that may affect a contract's total estimated profitability resulting in an adjustment of earnings.

NOTE 6. PROGRESS COLLECTIONS AND DEFERRED INCOME

Contract liabilities include progress collections, which reflects billings in excess of revenue, and deferred income on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements. Contract liabilities consist of the following:


	March 31, 2024		December 31, 2023
Progress collections	$	5,573	$	5,405
Deferred income	138		137
Progress collections and deferred income (contract liabilities)	$	5,711	$	5,542

Revenue recognized during the three months ended March 31, 2024 and 2023 that was included in the contract liabilities at the beginning of the period was $1,476 million and $962 million, respectively.

NOTE 7. LEASES

Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment.


	Three Months Ended March 31,
Operating Lease Expense	2024		2023
Long-term fixed lease	$	74	$	69
Long-term variable lease	24		15
Short-term lease	140		128
Total operating lease expense	$	238	$	212

Cash flows used in operating activities for operating leases approximates our expense for the three months ended March 31, 2024 and 2023.

Baker Hughes Company 2024 First Quarter Form 10-Q | 9

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

The weighted-average remaining lease term as of March 31, 2024 and December 31, 2023 was approximately seven years for our operating leases. The weighted-average discount rate used to determine the operating lease liability as of March 31, 2024 and December 31, 2023 was 4.0% and 3.3%, respectively.

NOTE 8. DEBT

The carrying value of our short-term and long-term debt consist of the following:


	March 31, 2024		December 31, 2023
Short-term and current portion of long-term debt
8.55% Debentures due June 2024	$	108	$	109
Other debt	39		39
Total short-term and current portion of long-term debt	147		148


Long-term debt
2.061% Senior Notes due December 2026	598		598
3.337% Senior Notes due December 2027	1,289		1,294
6.875% Notes due January 2029	266		268
3.138% Senior Notes due November 2029	523		523
4.486% Senior Notes due May 2030	498		498
5.125% Senior Notes due September 2040	1,279		1,281
4.080% Senior Notes due December 2047	1,338		1,338
Other long-term debt	67		73
Total long-term debt	5,859		5,872
Total debt	$	6,006	$	6,020

The estimated fair value of total debt at March 31, 2024 and December 31, 2023 was $5,479 million and $5,571 million, respectively. For a majority of our debt the fair value was determined using quoted period-end market prices. Where market prices are not available, we estimate fair values based on valuation methodologies using current market interest rate data adjusted for our non-performance risk.

We have a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial banks maturing in November 2028. The Credit Agreement contains certain representations and warranties, certain affirmative covenants and negative covenants, in each case we consider customary. Upon the occurrence of certain events of default, our obligations under the Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the Credit Agreement and other customary defaults. No such events of default have occurred. The Credit Agreement is fully and unconditionally guaranteed on a senior unsecured basis by Baker Hughes. In addition, we have authorization to issue up to $3 billion of commercial paper. At March 31, 2024 and December 31, 2023, there were no borrowings under the Credit Agreement and no outstanding commercial paper.

Baker Hughes Co-Obligor, Inc. is a co-obligor, jointly and severally with Baker Hughes Holdings LLC ("BHH LLC") on our long-term debt securities. This co-obligor is a 100%-owned finance subsidiary of BHH LLC that was incorporated for the sole purpose of serving as a corporate co-obligor of long-term debt securities and has no assets or operations other than those related to its sole purpose. As of March 31, 2024, Baker Hughes Co-Obligor, Inc. is a co-obligor of certain debt securities totaling $5,900 million.

Certain Senior Notes contain covenants that restrict our ability to take certain actions, including, but not limited to, the creation of certain liens securing debt, the entry into certain sale-leaseback transactions, and engaging in certain merger, consolidation and asset sale transactions in excess of specified limits. At March 31, 2024, we were in compliance with all debt covenants.

Baker Hughes Company 2024 First Quarter Form 10-Q | 10

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 9. INCOME TAXES

For the three months ended March 31, 2024, the provision for income taxes was $178 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to income in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances, partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances.

For the three months ended March 31, 2023, the provision for income taxes was $179 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to income in jurisdictions with tax rates higher than in the U.S., which is partially offset by income subject to U.S. tax at an effective rate less than 21% due to valuation allowances.

NOTE 10. EQUITY

COMMON STOCK

We are authorized to issue 2 billion shares of Class A common stock, 1.25 billion shares of Class B common stock and 50 million shares of preferred stock each of which have a par value of $0.0001 per share. As of March 31, 2024 and December 31, 2023, there were no shares of Class B common stock issued and outstanding. We have not issued any preferred stock.

We have a share repurchase program which we expect to fund from cash generated from operations, and we expect to make share repurchases from time to time subject to the Company's capital plan, market conditions, and other factors, including regulatory restrictions. The repurchase program may be suspended or discontinued at any time and does not have a specified expiration date. During the three months ended March 31, 2024, the Company repurchased and canceled 5.4 million shares of Class A common stock for $158 million, representing an average price per share of $29.32. There were no shares of Class common stock repurchased during the three months ended March 31, 2023. As of March 31, 2024, the Company had authorization remaining to repurchase up to approximately $2.1 billion of its Class A common stock.

The following table presents the changes in the number of shares outstanding (in thousands):


	Class A Common Stock
	2024	2023
Balance at January 1	997,709	1,005,960
Issue of shares upon vesting of restricted stock units (1)	4,745	5,342
Issue of shares on exercise of stock options (1)	—	88
Issue of shares for employee stock purchase plan	458	491

Repurchase and cancellation of Class A common stock	(5,399)	—
Balance at March 31	997,513	1,011,881

(1)Share amounts reflected above are net of shares withheld to satisfy the employee's tax withholding obligation.

Baker Hughes Company 2024 First Quarter Form 10-Q | 11

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

ACCUMULATED OTHER COMPREHENSIVE LOSS (AOCL)

The following tables present the changes in accumulated other comprehensive loss, net of tax:


	Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss
Balance at December 31, 2023	$	(2,513)	$	(6)	$	(277)	$	(2,796)
Other comprehensive income (loss) before reclassifications	(63)		2		(1)		(62)
Amounts reclassified from accumulated other comprehensive loss	—		1		3		4
Deferred taxes	—		(1)		—		(1)
Other comprehensive income (loss)	(63)		2		2		(59)



Balance at March 31, 2024	$	(2,576)	$	(4)	$	(275)	$	(2,855)


	Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss
Balance at December 31, 2022	$	(2,666)	$	(9)	$	(296)	$	(2,971)
Other comprehensive loss before reclassifications	(61)		(1)		3		(59)
Amounts reclassified from accumulated other comprehensive loss	—		1		4		5

Other comprehensive income (loss)	(61)		(1)		7		(55)




Balance at March 31, 2023	$	(2,727)	$	(10)	$	(289)	$	(3,026)

The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2024 and 2023 represent (i) gains (losses) reclassified on cash flow hedges when the hedged transaction occurs, (ii) the amortization of net actuarial gain (loss), prior service credit, settlements, and curtailments which are included in the computation of net periodic pension cost, and (iii) the release of foreign currency translation adjustments.

NOTE 11. EARNINGS PER SHARE

Basic and diluted net income per share of Class A common stock is presented below:


	Three Months Ended March 31,
(In millions, except per share amounts)	2024		2023
Net income	$	463	$	581
Less: Net income attributable to noncontrolling interests	8		5
Net income attributable to Baker Hughes Company	$	455	$	576

Weighted average shares outstanding:
Class A basic	998		1,010
Class A diluted	1,004		1,018
Net income per share attributable to common stockholders:
Class A basic	$	0.46	$	0.57
Class A diluted	$	0.45	$	0.57

Baker Hughes Company 2024 First Quarter Form 10-Q | 12

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023, Class A diluted shares include the dilutive impact of equity awards except for approximately 1 million and 2 million options, respectively, that were excluded because the exercise price exceeded the average market price of our Class A common stock and is therefore antidilutive.

NOTE 12. FINANCIAL INSTRUMENTS

RECURRING FAIR VALUE MEASUREMENTS

Our assets and liabilities measured at fair value on a recurring basis consist of derivative instruments and investment securities.


	March 31, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
Assets
Derivatives	$	—	$	21	$	—	$	21	$	—	$	34	$	—	$	34
Investment securities	1,042		—		2		1,044		1,040		—		2		1,042
Total assets	1,042		21		2		1,065		1,040		34		2		1,076

Liabilities
Derivatives	—		(73)		—		(73)		—		(76)		—		(76)
Total liabilities	$	—	$	(73)	$	—	$	(73)	$	—	$	(76)	$	—	$	(76)


	March 31, 2024								December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investment securities (1)
Non-U.S. debt securities (2)	$	30	$	—	$	—	$	30	$	66	$	1	$	—	$	67
Equity securities	529		485		—		1,014		527		451		(3)		975
Total	$	559	$	485	$	—	$	1,044	$	593	$	452	$	(3)	$	1,042

(1)Gains recorded to earnings related to these securities were $27 million and $392 million for the three months ended March 31, 2024 and 2023, respectively.

(2)As of March 31, 2024, our non-U.S. debt securities are classified as available for sale securities and mature within two years.

As of March 31, 2024 and December 31, 2023, the balance of our equity securities with readily determinable fair values is $1,014 million and $975 million, respectively, and is comprised mainly of our investment in ADNOC Drilling, and is recorded primarily in "All other current assets" in the condensed consolidated statements of financial position. We measured our investments at fair value based on quoted prices in active markets.

Gains recorded to earnings for our equity securities with readily determinable fair values were $52 million and $392 million for the three months ended March 31, 2024 and 2023, respectively. Gains (losses) related to our equity securities with readily determinable fair values are reported in "Other non-operating income (loss), net" in the condensed consolidated statements of income (loss).

FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

Our financial instruments include cash and cash equivalents, current receivables, certain investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments as of March 31, 2024 and December 31, 2023 approximates their carrying value

Baker Hughes Company 2024 First Quarter Form 10-Q | 13

Baker Hughes Company

Notes to Unaudited Condensed Consolidated Financial Statements

as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 8. Debt."

DERIVATIVES AND HEDGING

We use derivatives to manage our risks and do not use derivatives for speculation. The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.

March 31, 2024

December 31, 2023

Assets

Liabilities

Assets

Liabilities

Derivatives accounted for as hedges

Currency exchange contracts

SEC Form 10-Q filed by Baker Hughes Company