Baker Hughes, a GE company, has announced the premerger Baker Hughes Incorporated financial results for the second quarter of 2017. Baker Hughes is the successor to Baker Hughes Incorporated. Events subsequent to 30 June 2017, including the completion of the combination with GE Oil and Gas, are not reflected in these results.
Revenue for the second quarter of 2017 was US$2.4 billion, an increase of US$142 million, or 6%, sequentially. The increase was driven by improved activity across U.S. operations, a seasonal activity uplift in the Russia Caspian region, process and pipeline business, and North Sea operations, and certain areas of activity growth internationally, such as Mexico, West Africa, and Iraq. This increase was partially offset by the seasonal spring break-up in Canada, price deterioration in the Middle East, and a large direct sale into China in the prior quarter, not repeating.
On a GAAP basis, net loss attributable to Baker Hughes for the second quarter of 2017 was US$179 million, or US$0.42 per diluted share, compared to US$129 million, or US$0.30 per diluted share, in the first quarter of 2017.
Adjusted net loss for the second quarter of 2017 was US$46 million, or US$0.11 per diluted share, compared to US$15 million, or US$0.04 per diluted share, in the first quarter of 2017. Adjusted net loss excludes adjustments totalling US$133 million after tax, or US$0.31 per diluted share, primarily associated with litigation and other related matters and merger costs.
Adjusted EBITDA was US$276 million for the second quarter of 2017, a decrease of US$33 million, or 11% sequentially. Adjusted EBITDA in the first quarter of 2017 included an US$84 million benefit related to bad-debt recoveries in Ecuador from receiving government-backed bonds in exchange for outstanding fully reserved receivables.
Cash flows used in operating activities were US$64 million for the second quarter of 2017, compared to US$163 million in the first quarter of 2017. Free cash flow a non-GAAP measure for the quarter was US$135 million, compared to US$174 million in the first quarter of 2017. The sequential improvement in cash flows was mainly driven by annual compensation-related payments in first quarter of 2017 not repeating, partially offset by lower cash from operations and increased capital expenditures.
For the quarter, capital expenditures were US$129 million, an increase of US$42 million, or 48%, sequentially. The sequential increase in capital expenditures was mainly attributable to revenue generating assets to meet increased activity levels. Depreciation and amortisation expense for the quarter was US$216 million, a decline of US$2 million, or 1%, sequentially.
Income tax expense was US$72 million for the second quarter of 2017, an effective tax rate of 67%, compared to US$47 million, an effective tax rate of 57%, in the first quarter of 2017. The negative effective tax rate was primarily due to the geographical mix of earnings and losses, which resulted in taxes in certain jurisdictions, including withholding and deemed profit taxes, exceeding the tax benefit from the losses in other jurisdictions due to valuation allowances provided in most loss jurisdictions.
Corporate costs were US$103 million in the quarter, compared to US$37 million in the prior quarter. The sequential increase in corporate costs was due to a US$67 million charge recorded in the quarter related to litigation and other related matters.
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