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 ~~September 30, 2022~~March 31, 2023


☐						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 1-09397


Baker Hughes Holdings LLC

(Exact name of registrant as specified in its charter)


Delaware		76-0207995
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

17021 Aldine Westfield
Houston,	Texas	77073-5101
(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
5.125% Senior Notes due 2040	-	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 ~~October~~April 13, ~~2022,~~2023, the registrant had ~~outstanding 1,008,467,549 common~~outstanding 1,012,362,186 common units. None of the common units are publicly traded.

Baker Hughes Holdings LLC

Table of Contents


		Page No.
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income (Loss) (Unaudited) - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	1

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	2

	Condensed Consolidated Statements of Financial Position (Unaudited) - ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Changes in Members' Equity (Unaudited) - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Nine~~Three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	65

	Notes to Unaudited Condensed Consolidated Financial Statements	76

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2824

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4033

Item 4.	Controls and Procedures	4033

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	4135

Item 1A.	Risk Factors	4135

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4135

Item 3.	Defaults Upon Senior Securities	4135

Item 4.	Mine Safety Disclosures	4135

Item 5.	Other Information	4135

Item 6.	Exhibits	4135

	Signatures	4236

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | i

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Income (Loss)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions, except per unit amounts)	(In millions, except per unit amounts)	2022		2021		2022		2021		(In millions, except per unit amounts)	2023		2022
Revenue:	Revenue:									Revenue:
Sales of goods	Sales of goods	$	3,084	$	2,984	$	8,710	$	8,997	Sales of goods	$	3,484	$	2,809
Sales of services	Sales of services	2,285		2,109		6,541		6,020		Sales of services	2,232		2,026
Total revenue	Total revenue	5,369		5,093		15,251		15,017		Total revenue	5,716		4,835

Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	2,639		2,561		7,502		7,769		Cost of goods sold	2,982		2,366
Cost of services sold	Cost of services sold	1,606		1,522		4,686		4,404		Cost of services sold	1,585		1,499
Selling, general and administrative	Selling, general and administrative	620		607		1,865		1,836		Selling, general and administrative	655		621

Restructuring, impairment and other	Restructuring, impairment and other	230		14		653		219		Restructuring, impairment and other	56		70
Separation related		5		11		23		53
Total costs and expenses	Total costs and expenses	5,100		4,715		14,729		14,281		Total costs and expenses	5,278		4,556
Operating income	Operating income	269		378		522		736		Operating income	438		279
Other non-operating loss, net		(60)		(102)		(657)		(791)
Other non-operating income (loss), net										Other non-operating income (loss), net	386		(28)
Interest expense, net	Interest expense, net	(65)		(67)		(188)		(205)		Interest expense, net	(64)		(64)
Income (loss) before income taxes		144		209		(323)		(260)
Income before income taxes										Income before income taxes	760		187
Provision for income taxes	Provision for income taxes	(145)		(189)		(422)		(422)		Provision for income taxes	(141)		(95)
Net income (loss)		(1)		20		(745)		(682)
Net income										Net income	619		92
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	8		5		20		24		Less: Net income attributable to noncontrolling interests	5		5
Net income (loss) attributable to Baker Hughes Holdings LLC		$	(9)	$	15	$	(765)	$	(706)
Net income attributable to Baker Hughes Holdings LLC										Net income attributable to Baker Hughes Holdings LLC	$	614	$	87

Cash distribution per common unit	Cash distribution per common unit	$	0.18	$	0.18	$	0.54	$	0.54	Cash distribution per common unit	$	0.19	$	0.18

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 1

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2023		2022
Net income (loss)		$	(1)	$	20	$	(745)	$	(682)
Net income										Net income	$	619	$	92
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	8		5		20		24		Less: Net income attributable to noncontrolling interests	5		5
Net income (loss) attributable to Baker Hughes Holdings LLC		(9)		15		(765)		(706)
Net income attributable to Baker Hughes Holdings LLC										Net income attributable to Baker Hughes Holdings LLC	614		87
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):

Foreign currency translation adjustments	Foreign currency translation adjustments	(321)		(158)		(474)		(51)		Foreign currency translation adjustments	(61)		17
Cash flow hedges	Cash flow hedges	—		(2)		1		(13)		Cash flow hedges	(1)		1
Benefit plans	Benefit plans	(27)		25		5		78		Benefit plans	7		8
Other comprehensive income (loss)	Other comprehensive income (loss)	(348)		(135)		(468)		14		Other comprehensive income (loss)	(55)		26
Less: Other comprehensive income (loss) attributable to noncontrolling interests		1		(1)		(2)		(1)
Less: Other comprehensive loss attributable to noncontrolling interests										Less: Other comprehensive loss attributable to noncontrolling interests	—		(1)
Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC	Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC	(349)		(134)		(466)		15		Other comprehensive income (loss) attributable to Baker Hughes Holdings LLC	(55)		27
Comprehensive loss		(349)		(115)		(1,213)		(668)
Comprehensive income										Comprehensive income	564		118
Less: Comprehensive income attributable to noncontrolling interests	Less: Comprehensive income attributable to noncontrolling interests	9		4		18		23		Less: Comprehensive income attributable to noncontrolling interests	5		4
Comprehensive loss attributable to Baker Hughes Holdings LLC		$	(358)	$	(119)	$	(1,231)	$	(691)
Comprehensive income attributable to Baker Hughes Holdings LLC										Comprehensive income attributable to Baker Hughes Holdings LLC	$	559	$	114

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 2

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Financial Position

(Unaudited)


(In millions)	(In millions)	September 30, 2022		December 31, 2021		(In millions)	March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,848	$	3,843	Cash and cash equivalents	$	2,413	$	2,485
Current receivables, net	Current receivables, net	5,722		5,718		Current receivables, net	6,376		5,974
Inventories, net	Inventories, net	4,111		3,979		Inventories, net	4,786		4,587
All other current assets	All other current assets	1,790		1,582		All other current assets	1,894		1,559
Total current assets	Total current assets	14,471		15,122		Total current assets	15,469		14,605
Property, plant and equipment (net of accumulated depreciation of $4,961 and $5,003)		4,381		4,877
Property, plant and equipment (net of accumulated depreciation of $5,258 and $5,121)						Property, plant and equipment (net of accumulated depreciation of $5,258 and $5,121)	4,513		4,538
Goodwill	Goodwill	5,196		5,721		Goodwill	5,677		5,691
Other intangible assets, net	Other intangible assets, net	3,980		4,131		Other intangible assets, net	4,123		4,180
Contract and other deferred assets	Contract and other deferred assets	1,526		1,598		Contract and other deferred assets	1,603		1,503
All other assets	All other assets	2,976		3,102		All other assets	3,067		2,998
Deferred income taxes	Deferred income taxes	701		735		Deferred income taxes	663		657
Total assets	Total assets	$	33,231	$	35,286	Total assets	$	35,115	$	34,172
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	3,801	$	3,745	Accounts payable	$	4,263	$	4,298
Current portion of long-term debt		43		40
Short-term and current portion of long-term debt						Short-term and current portion of long-term debt	684		677
Progress collections and deferred income	Progress collections and deferred income	3,262		3,232		Progress collections and deferred income	4,434		3,822
All other current liabilities	All other current liabilities	2,415		2,163		All other current liabilities	2,185		2,235
Total current liabilities	Total current liabilities	9,521		9,180		Total current liabilities	11,566		11,032
Long-term debt	Long-term debt	6,612		6,687		Long-term debt	5,975		5,980
Deferred income taxes	Deferred income taxes	119		73		Deferred income taxes	129		135
Liabilities for pensions and other postretirement benefits	Liabilities for pensions and other postretirement benefits	1,020		1,110		Liabilities for pensions and other postretirement benefits	932		960
All other liabilities	All other liabilities	1,500		1,510		All other liabilities	1,421		1,406
Members' Equity:	Members' Equity:					Members' Equity:

Members' capital, common units, 1,019 and 1,026 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		34,560		35,589
Members' capital, common units, 1,012 and 1,006 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively						Members' capital, common units, 1,012 and 1,006 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	34,207		34,336
Retained loss	Retained loss	(17,075)		(16,311)		Retained loss	(16,224)		(16,837)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,158)		(2,691)		Accumulated other comprehensive loss	(3,026)		(2,971)
Baker Hughes Holdings LLC equity	Baker Hughes Holdings LLC equity	14,327		16,587		Baker Hughes Holdings LLC equity	14,957		14,528
Noncontrolling interests	Noncontrolling interests	132		139		Noncontrolling interests	135		131
Total equity	Total equity	14,459		16,726		Total equity	15,092		14,659
Total liabilities and equity	Total liabilities and equity	$	33,231	$	35,286	Total liabilities and equity	$	35,115	$	34,172

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 3

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Changes in Members' Equity

(Unaudited)

(In millions, except per unit amounts) Members' Capital Retained
Loss Accumulated
Other
Comprehensive
Loss Non-
controlling
Interests Total Equity
Balance at December 31, 2021 $ 35,589 $ (16,311) $ (2,691) $ 139 $ 16,726
Comprehensive loss:
Net income (loss) (765) 20 (745)
Other comprehensive loss (466) (2) (468)
Regular cash distribution to Members ($0.54 per unit) (552) (552)
Repurchase and cancellation of common units (727) (727)
Baker Hughes stock-based compensation cost 155 155
Other 95 1 (1) (25) 70
Balance at September 30, 2022 $ 34,560 $ (17,075) $ (3,158) $ 132 $ 14,459


(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at December 31, 2022	$	34,336	$	(16,837)	$	(2,971)	$	131	$	14,659
Comprehensive income (loss):
Net income			614				5		619
Other comprehensive loss					(55)				(55)
Regular cash distribution to Members ($0.19 per unit)	(192)								(192)



Baker Hughes stock-based compensation cost	49								49
Other	14		(1)				(1)		12
Balance at March 31, 2023	$	34,207	$	(16,224)	$	(3,026)	$	135	$	15,092

(In millions, except per unit amounts) Members' Capital Retained
Loss Accumulated
Other
Comprehensive
Loss Non-
controlling
Interests Total Equity
Balance at June 30, 2022 $ 34,923 $ (17,067) $ (2,809) $ 108 $ 15,155
Comprehensive loss:
Net income (loss) (9) 8 (1)
Other comprehensive income (loss) (349) 1 (348)
Regular cash distribution to Members ($0.18 per unit) (183) (183)
Repurchase and cancellation of common units (265) (265)
Baker Hughes stock-based compensation cost 52 52
Other 33 1 15 49
Balance at September 30, 2022 $ 34,560 $ (17,075) $ (3,158) $ 132 $ 14,459

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 4~~

~~Baker Hughes Holdings LLC~~

~~Condensed Consolidated Statements of Changes in Members' Equity~~

~~(Unaudited)~~

(In millions, except per unit amounts) Members' Capital Retained
Loss Accumulated
Other
Comprehensive
Loss Non-
controlling
Interests Total Equity
Balance at December 31, 2020 $ 36,512 $ (15,939) $ (2,542) $ 132 $ 18,163
Comprehensive income (loss):
Net income (loss) (706) 24 (682)
Other comprehensive income (loss) 15 (1) 14
Regular cash distribution to Members ($0.54 per unit) (563) (563)
Repurchase and cancellation of common units (106) (106)
Baker Hughes stock-based compensation cost 153 153
Other 42 (13) 29
Balance at September 30, 2021 $ 36,038 $ (16,645) $ (2,527) $ 142 $ 17,008


(In millions, except per unit amounts)	(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity		(In millions, except per unit amounts)	Members' Capital		Retained Loss		Accumulated Other Comprehensive Loss		Non- controlling Interests		Total Equity
Balance at June 30, 2021		$	36,266	$	(16,660)	$	(2,393)	$	142	$	17,355
Comprehensive income (loss):
Balance at December 31, 2021												Balance at December 31, 2021	$	35,589	$	(16,311)	$	(2,691)	$	139	$	16,726
Comprehensive income:												Comprehensive income:
Net income	Net income			15				5		20		Net income			87				5		92
Other comprehensive loss						(134)		(1)		(135)
Other comprehensive income (loss)												Other comprehensive income (loss)					27		(1)		26
Regular cash distribution to Members ($0.18 per unit)	Regular cash distribution to Members ($0.18 per unit)	(188)								(188)		Regular cash distribution to Members ($0.18 per unit)	(185)								(185)

Repurchase and cancellation of common units	Repurchase and cancellation of common units	(106)								(106)		Repurchase and cancellation of common units	(236)								(236)
Baker Hughes stock-based compensation cost	Baker Hughes stock-based compensation cost	51								51		Baker Hughes stock-based compensation cost	52								52

Other	Other	15						(4)		11		Other	45						(7)		38
Balance at September 30, 2021		$	36,038	$	(16,645)	$	(2,527)	$	142	$	17,008
Balance at March 31, 2022												Balance at March 31, 2022	$	35,265	$	(16,224)	$	(2,664)	$	136	$	16,513

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 54

Baker Hughes Holdings LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss		$	(745)	$	(682)
Adjustments to reconcile net loss to net cash flows from operating activities:
Net income						Net income	$	619	$	92
Adjustments to reconcile net income to net cash flows from operating activities:						Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	806		832		Depreciation and amortization	269		277
Loss on assets held for sale		426		—
Loss on equity securities		164		955
Property, plant and equipment impairment, net		168		21
Gain on equity securities						Gain on equity securities	(392)		(11)
Provision for deferred income taxes						Provision for deferred income taxes	23		12
Stock-based compensation cost						Stock-based compensation cost	49		52

Inventory impairment	Inventory impairment	31		—		Inventory impairment	18		—

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Current receivables	Current receivables	(452)		319		Current receivables	(401)		(264)
Inventories	Inventories	(626)		151		Inventories	(265)		(205)
Accounts payable	Accounts payable	263		(10)		Accounts payable	43		74
Progress collections and deferred income	Progress collections and deferred income	705		(157)		Progress collections and deferred income	639		280
Contract and other deferred assets	Contract and other deferred assets	(151)		178		Contract and other deferred assets	(148)		(38)
Other operating items, net	Other operating items, net	408		(9)		Other operating items, net	8		(191)
Net cash flows from operating activities	Net cash flows from operating activities	997		1,598		Net cash flows from operating activities	462		78
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Expenditures for capital assets	Expenditures for capital assets	(720)		(590)		Expenditures for capital assets	(310)		(268)
Proceeds from disposal of assets	Proceeds from disposal of assets	189		178		Proceeds from disposal of assets	46		91

Other investing items, net	Other investing items, net	(49)		200		Other investing items, net	35		(89)
Net cash flows used in investing activities	Net cash flows used in investing activities	(580)		(212)		Net cash flows used in investing activities	(229)		(266)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net repayments of debt and other borrowings		(22)		(60)
Repayment of commercial paper		—		(832)
Net repayments of debt						Net repayments of debt	(5)		(11)

Distributions to Members	Distributions to Members	(552)		(563)		Distributions to Members	(192)		(185)

Repurchase of common units	Repurchase of common units	(727)		(106)		Repurchase of common units	—		(236)

Other financing items, net	Other financing items, net	4		(24)		Other financing items, net	(53)		(37)
Net cash flows used in financing activities	Net cash flows used in financing activities	(1,297)		(1,585)		Net cash flows used in financing activities	(250)		(469)
Effect of currency exchange rate changes on cash and cash equivalents	Effect of currency exchange rate changes on cash and cash equivalents	(115)		(9)		Effect of currency exchange rate changes on cash and cash equivalents	(55)		1
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	(995)		(208)		Decrease in cash and cash equivalents	(72)		(656)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	3,843		4,125		Cash and cash equivalents, beginning of period	2,485		3,843
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	2,848	$	3,917	Cash and cash equivalents, end of period	$	2,413	$	3,187
Supplemental cash flows disclosures:	Supplemental cash flows disclosures:					Supplemental cash flows disclosures:
Income taxes paid, net of refunds	Income taxes paid, net of refunds	$	395	$	181	Income taxes paid, net of refunds	$	163	$	130
Interest paid	Interest paid	$	190	$	204	Interest paid	$	50	$	48

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 65

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

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

DESCRIPTION OF THE BUSINESS

Baker Hughes Holdings LLC, a Delaware limited liability company ("the Company", "BHH LLC", "we", "us", or "our") and the successor to Baker Hughes Incorporated ("BHI"), is an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain. As of September 30, 2022, General Electric ("GE") owns 0.7% of our common units and Baker Hughes Company ("Baker Hughes") owns directly or indirectly 99.3% of our common units (collectively, "the Members"). BHH LLC is a Securities and Exchange Commission ("SEC") Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.

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 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, ~~2021 ("2021~~2022 (the "2022 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. The condensed consolidated financial statements include the accounts of BHH LLC and all of its subsidiaries and affiliates which it controls or variable interest entities for which we have determined that we are the primary beneficiary. 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 to the current year presentation. In the notes to the unaudited condensed consolidated financial statements, all dollar and common unit amounts in tabulations are in millions of dollars and units, 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 ~~2021~~2022 Annual Report for the discussion of our significant accounting policies.

Cash and Cash Equivalents

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~$611~~$549 million and ~~$601~~$605 million, respectively, of cash held in bank accounts that cannot be readily released, transferred or otherwise converted into a currency that is regularly transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these jurisdictions, and we do not currently anticipate a need to transfer these funds to the U.S.

Supply Chain Finance Programs

On January 1, 2023, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. ASU 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which enhances the transparency of supplier finance programs and requires certain disclosures for a buyer in a supplier finance program.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 6

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

Under the supply chain finance (“SCF”) programs, administered by a third party, our suppliers are given the opportunity to sell receivables from us to participating financial institutions at their sole discretion at a rate that leverages our credit rating and thus might be more beneficial to our suppliers. Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

As of March 31, 2023 and December 31, 2022, $316 million and $275 million of SCF program liabilities are recorded in “Accounts payable” in our condensed consolidated statements of financial position, respectively, and reflected as cash flow from operating activities in our condensed consolidated statements of cash flows when settled.

NEW ACCOUNTING STANDARDS TO BE ADOPTED

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 are comprised of the following:


	March 31, 2023		December 31, 2022
Customer receivables	$	5,264	$	5,083
Other	1,451		1,232
Total current receivables	6,715		6,315
Less: Allowance for credit losses	(339)		(341)
Total current receivables, net	$	6,376	$	5,974

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

NOTE 3. INVENTORIES

Inventories, net of reserves of $383 million and $396 million as of March 31, 2023 and December 31, 2022, respectively, are comprised of the following:


	March 31, 2023		December 31, 2022
Finished goods	$	2,461	$	2,419
Work in process and raw materials	2,325		2,168

Total inventories, net	$	4,786	$	4,587

During the three months ended March 31, 2023, we recorded inventory impairments of $18 million, predominately in our Oilfield Services & Equipment ("OFSE") segment. Charges for inventory impairments are reported in the "Cost of goods sold" caption in the condensed consolidated statements of income (loss). See "Note 16. Restructuring, Impairment, and Other" for further information.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 7

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

~~NOTE 2. REVENUE RELATED TO CONTRACTS WITH CUSTOMERS~~

~~DISAGGREGATED REVENUE~~

~~We disaggregate our revenue from contracts with customers by primary geographic markets.~~

Three Months Ended September 30, Nine Months Ended September 30,
Total Revenue 2022 2021 2022 2021
U.S. $ 1,286 $ 1,199 $ 3,611 $ 3,337
Non-U.S. 4,083 3,894 11,640 11,680
Total $ 5,369 $ 5,093 $ 15,251 $ 15,017

~~REMAINING PERFORMANCE OBLIGATIONS~~

As of September 30, 2022 and 2021, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $24.7 billion and $23.5 billion, respectively. As of September 30, 2022, we expect to recognize revenue of approximately 55%, 68% and 87% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.

~~NOTE 3. CURRENT RECEIVABLES~~

~~Current receivables are comprised of the following:~~

September 30, 2022 December 31, 2021
Customer receivables $ 4,655 $ 4,724
Related parties 168 548
Other 1,242 846
Total current receivables 6,065 6,118
Less: Allowance for credit losses (343) (400)
Total current receivables, net $ 5,722 $ 5,718

Customer receivables are recorded at the invoiced amount. Related parties as of December 31, 2021 consists of amounts owed to us primarily by GE. As of June 30, 2022, GE is no longer considered a related party. See "Note 14. Related Party Transactions" for further information. The "Other" category consists primarily of advance payments to suppliers, indirect taxes, amounts owed from GE for certain tax matters indemnified pursuant to the Tax Matters Agreement, and customer retentions.

NOTE 4. ~~INVENTORIES~~

~~Inventories, net of reserves of $398 million and $374 million as of September 30, 2022 and December 31, 2021, respectively, are comprised of the following:~~

September 30, 2022 December 31, 2021
Finished goods $ 2,197 $ 2,228
Work in process and raw materials 1,914 1,751
Total inventories, net $ 4,111 $ 3,979

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 8~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~NOTE 5.~~ GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The changes in the carrying value of goodwill are detailed below by segment:


		Oilfield Services		Oilfield Equipment		Turbo- machinery & Process Solutions		Digital Solutions		Total			Oilfield Services & Equipment		Industrial & Energy Technology		Total
Balance at December 31, 2020, gross		$	15,362	$	4,162	$	2,234	$	2,452	$	24,210
Accumulated impairment at December 31, 2020		(14,061)		(4,156)		—		(254)		(18,471)
Balance at December 31, 2020		1,301		6		2,234		2,198		5,739
Balance at December 31, 2021, gross												Balance at December 31, 2021, gross	$	19,531	$	4,661	$	24,192
Accumulated impairment at December 31, 2021												Accumulated impairment at December 31, 2021	(18,217)		(254)		(18,471)
Balance at December 31, 2021												Balance at December 31, 2021	1,314		4,407		5,721

Currency exchange and other		10		(3)		(62)		37		(18)
Balance at December 31, 2021		1,311		3		2,172		2,235		5,721
Disposition												Disposition	(161)		—		(161)
Acquisitions												Acquisitions	41		417		458
Currency exchange, impairment and other	Currency exchange, impairment and other	3		(3)		(92)		(41)		(133)		Currency exchange, impairment and other	—		(96)		(96)
Total	Total	1,314		—		2,080		2,194		5,588		Total	1,194		4,728		5,922
Classified as held for sale (1)	Classified as held for sale (1)	(161)		—		—		(231)		(392)		Classified as held for sale (1)	—		(230)		(230)
Balance at September 30, 2022		$	1,153	$	—	$	2,080	$	1,963	$	5,196
Balance at December 31, 2022												Balance at December 31, 2022	1,194		4,498		5,691

Currency exchange and other												Currency exchange and other	16		(30)		(14)
Balance at March 31, 2023												Balance at March 31, 2023	$	1,210	$	4,468	$	5,677

(1)The reduction in ~~Oilfield Services~~Industrial & Energy Technology ("~~OFS") and Digital Solutions ("DS"~~IET") goodwill relates to transferring our ~~OFS Russia business and DS~~IET Nexus Controls business to held for ~~sale, respectively.~~sale. See "Note 17. ~~Businesses~~Business Held for Sale" for further information.

We perform our annual goodwill impairment test for each of our reporting units as of July 1 of each fiscal year, in conjunction with our annual strategic planning process. ~~Our reporting units are the same as our four reportable segments.~~ We also test goodwill for impairment whenever events or circumstances occur which, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying value. Potential impairment indicators include, but are not limited to, (i) the results of our most recent annual or interim impairment testing, in particular the magnitude of the excess of fair value over carrying value observed, (ii) downward revisions to internal forecasts, and the magnitude thereof, if any, and (iii) declines in Baker Hughes' market capitalization below its book value, and the magnitude and duration of those declines, if any.

During the ~~third~~first quarter of ~~2022,~~2023, we completed ~~our annual~~a review to assess whether indicators of impairment ~~test and determined~~existed. As a result of this assessment, we concluded that no indicators existed that would lead to a determination that it is more likely than not that the fair value ~~was substantially in excess~~ of ~~the carrying value for~~ each reporting unit ~~except for Oilfield Equipment resulting in an immaterial impairment of the residual amount of goodwill for this reporting unit.~~is less than its carrying value. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future periods.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 98

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

OTHER INTANGIBLE ASSETS

Intangible assets are comprised of the following:

September 30, 2022 December 31, 2021
Gross
Carrying
Amount Accumulated
Amortization Net Gross
Carrying
Amount Accumulated
Amortization Net
Customer relationships $ 1,789 $ (701) $ 1,088 $ 1,922 $ (752) $ 1,170
Technology 1,089 (763) 326 1,090 (747) 343
Trade names and trademarks 288 (174) 114 292 (169) 123
Capitalized software 1,249 (999) 250 1,311 (1,057) 254
Finite-lived intangible assets 4,415 (2,637) 1,778 4,615 (2,725) 1,890
Indefinite-lived intangible assets 2,202 — 2,202 2,241 — 2,241
Total intangible assets (1)
$ 6,617 $ (2,637) $ 3,980 $ 6,856 $ (2,725) $ 4,131

~~(1)~~During the three and nine months ended September 30, 2022, we recorded intangible asset impairments to customer relationships of $12 million and capitalized software of $5 million. See "Note 16. Restructuring, Impairment and Other" for further information.


	March 31, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	1,898	$	(746)	$	1,152	$	1,917	$	(729)	$	1,189
Technology	1,204		(816)		388		1,212		(803)		409
Trade names and trademarks	287		(178)		109		287		(175)		112
Capitalized software	1,325		(1,053)		272		1,308		(1,040)		268


Finite-lived intangible assets	4,714		(2,793)		1,921		4,725		(2,747)		1,978
Indefinite-lived intangible assets	2,202		—		2,202		2,202		—		2,202
Total intangible assets	$	6,916	$	(2,793)	$	4,123	$	6,927	$	(2,747)	$	4,180

Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 1 to 35 years. Amortization expense for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was ~~$54~~$63 million and ~~$59~~$55 million, ~~respectively, and $164 million and $193 million for the nine months ended September 30, 2022 and 2021,~~ respectively.

Estimated amortization expense for the remainder of ~~2022~~2023 and each of the subsequent five fiscal years is expected to be as follows:


Year	Year	Estimated Amortization Expense		Year	Estimated Amortization Expense
Remainder of 2022		$	54
2023		207
Remainder of 2023				Remainder of 2023	$	184
2024	2024	194		2024	227
2025	2025	154		2025	186
2026	2026	109		2026	144
2027	2027	87		2027	120
2028				2028	97

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 IET segment. Our long-term equipment contracts are provided by both our IET and OFSE segments. Contract assets are comprised of the following:


	March 31, 2023		December 31, 2022
Long-term product service agreements	$	396	$	392
Long-term equipment contracts and certain other service agreements	1,034		955
Contract assets (total revenue in excess of billings)	1,430		1,347
Deferred inventory costs	142		125
Other costs to fulfill or obtain a contract (1)	31		31

Contract and other deferred assets	$	1,603	$	1,503

(1) Other costs to fulfill or obtain a contract consist primarily of non-recurring engineering costs incurred and expected to be recovered.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 109

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

Revenue recognized during the three months ended March 31, 2023 and 2022 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $1 million and $(4) 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. ~~CONTRACT AND OTHER DEFERRED ASSETS~~

Our long-term product service agreements relate to our Turbomachinery & Process Solutions segment. Contract assets reflect revenue earned in excess of billings on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended warranty arrangements and other deferred contract related costs. Contract assets are comprised of the following:

September 30, 2022 December 31, 2021
Long-term product service agreements $ 408 $ 589
Long-term equipment contracts (1)
965 825
Contract assets (total revenue in excess of billings) 1,373 1,414
Deferred inventory costs 124 156
Non-recurring engineering costs 29 28
Contract and other deferred assets $ 1,526 $ 1,598

~~(1)Reflects revenue earned in excess of billings on our long-term contracts to construct technically complex equipment and certain other service agreements.~~

Revenue recognized during the three months ended September 30, 2022 and 2021 from performance obligations satisfied (or partially satisfied) in previous periods related to our long-term service agreements was $2 million and $9 million, respectively, and $14 million and $18 million during the nine months ended September 30, 2022 and 2021, 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 7.~~ 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 are comprised of the following:


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Progress collections	Progress collections	$	3,144	$	3,108	Progress collections	$	4,282	$	3,713
Deferred income	Deferred income	118		124		Deferred income	152		109
Progress collections and deferred income (contract liabilities)	Progress collections and deferred income (contract liabilities)	$	3,262	$	3,232	Progress collections and deferred income (contract liabilities)	$	4,434	$	3,822

Revenue recognized during the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ that was included in the contract liabilities at the beginning of the period was ~~$467~~$962 million and ~~$448~~$739 million, ~~respectively, and $1,720 million and $2,033 million during the nine months ended September 30, 2022 and 2021,~~ respectively.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 11~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

NOTE 8.7. 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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Operating Lease Expense	Operating Lease Expense	2022		2021		2022		2021		Operating Lease Expense	2023		2022
Long-term fixed lease	Long-term fixed lease	$	65	$	64	$	190	$	192	Long-term fixed lease	$	69	$	63
Long-term variable lease	Long-term variable lease	14		7		36		24		Long-term variable lease	15		9
Short-term lease	Short-term lease	127		119		351		328		Short-term lease	128		109
Total operating lease expense	Total operating lease expense	$	206	$	190	$	577	$	544	Total operating lease expense	$	212	$	181

Cash flows used in operating activities for operating leases approximates our expense for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

The weighted-average remaining lease term as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 was approximately ~~eight years and nine~~seven years for our operating ~~leases, respectively.~~leases. The weighted-average discount rate used to determine the operating lease liability as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 was 3.2% and ~~3.3%~~3.1%, respectively.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 10

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE ~~9. BORROWINGS~~8. DEBT

The ~~Company's borrowings~~carrying value of our short-term and long-term debt are comprised of the following:


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Current borrowings
Short-term and current portion of long-term debt						Short-term and current portion of long-term debt

1.231% Senior Notes due December 2023						1.231% Senior Notes due December 2023	$	649	$	649
Other debt						Other debt	35		29
Total short-term and current portion of long-term debt						Total short-term and current portion of long-term debt	684		677


Other borrowings		$	43	$	40
Long-term debt						Long-term debt

Long-term borrowings
1.231% Senior Notes due December 2023		648		647
8.55% Debentures due June 2024	8.55% Debentures due June 2024	115		118		8.55% Debentures due June 2024	113		114
2.061% Senior Notes due December 2026	2.061% Senior Notes due December 2026	597		597		2.061% Senior Notes due December 2026	597		597
3.337% Senior Notes due December 2027	3.337% Senior Notes due December 2027	1,275		1,335		3.337% Senior Notes due December 2027	1,287		1,277
6.875% Notes due January 2029	6.875% Notes due January 2029	275		279		6.875% Notes due January 2029	272		273
3.138% Senior Notes due November 2029	3.138% Senior Notes due November 2029	523		522		3.138% Senior Notes due November 2029	523		523
4.486% Senior Notes due May 2030	4.486% Senior Notes due May 2030	497		497		4.486% Senior Notes due May 2030	497		497
5.125% Senior Notes due September 2040	5.125% Senior Notes due September 2040	1,288		1,292		5.125% Senior Notes due September 2040	1,285		1,286
4.080% Senior Notes due December 2047	4.080% Senior Notes due December 2047	1,337		1,337		4.080% Senior Notes due December 2047	1,338		1,338
Other long-term borrowings		57		63
Total long-term borrowings		6,612		6,687
Total borrowings		$	6,655	$	6,727
Other long-term debt						Other long-term debt	63		75
Total long-term debt						Total long-term debt	5,975		5,980
Total debt						Total debt	$	6,659	$	6,658

The estimated fair value of total ~~borrowings~~debt at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 was ~~$5,696~~$6,040 million and ~~$7,328~~$5,863 million, respectively. For a majority of our ~~borrowings~~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.

BHH LLC has a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial banks maturing in December 2024. In addition, we have a commercial paper program with

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 12~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

authorization up to $3 billion under which we may issue from time to time commercial paper with maturities of no more than 397 days. The Credit Agreement contains certain customary representations and warranties, certain customary affirmative covenants and certain customary negative covenants. Upon the occurrence of certain events of default, BHH LLC's 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. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there were no borrowings under either the Credit Agreement or the commercial paper program.

Baker Hughes Co-Obligor, Inc. is a co-obligor, jointly and severally with 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 ~~September 30, 2022,~~March 31, 2023, Baker Hughes Co-Obligor, Inc. is a co-obligor of our long-term debt securities totaling ~~$6,555~~$6,560 million.

Certain Senior Notes contain covenants that restrict BHH LLC's 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 ~~September 30, 2022,~~March 31, 2023, we were in compliance with all debt covenants.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 11

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE ~~10.~~9. INCOME TAXES

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the provision for income taxes was ~~$145 million and $422 million, respectively.~~$141 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to ~~losses with no~~income subject to U.S. tax ~~benefit~~at an effective rate less than 21% due to valuation allowances, ~~restructuring charges for~~ which ~~a majority has no tax benefit, and earnings~~is partially offset by income in jurisdictions with tax rates higher than in the U.S. In addition, since we are a partnership for U.S. federal tax purposes, any tax ~~benefits~~impacts associated with U.S. income or losses are recognized by our Members and not reflected in our tax expense.

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the provision for income taxes was ~~$189 million and $422 million, respectively.~~$95 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances and ~~changes~~income in ~~unrecognized~~jurisdictions with tax rates higher than the U.S., partially offset by tax benefits related to uncertain tax positions.

NOTE ~~11.~~10. MEMBERS' EQUITY

COMMON UNITS

The BHH LLC Agreement provides that initially there is one class of common units ("Units"), which are currently held by the Members. If Baker Hughes issues a share of Class A common stock, including in connection with an equity incentive or similar plan, we will also issue a corresponding Unit to Baker Hughes or one of its direct subsidiaries. For the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we issued ~~9,069~~5,920 thousand and ~~7,204~~7,730 thousand Units, respectively, to Baker Hughes or one of its direct subsidiaries in connection with the issuance of its Class A common stock. The Members are entitled through their Units to receive distributions on an equal amount of any dividend paid by Baker Hughes to its Class A shareholders.

~~In 2021, Baker Hughes' Board of Directors authorized us to~~We have a Unit repurchase ~~up to $2 billion of our Units. We~~program which we expect to fund ~~the repurchase program~~ from cash generated from operations, and we expect to make Unit 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. There were no Units repurchased during the three months ended March 31, 2023. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, we repurchased and canceled ~~10.7 million and 25.5~~8.1 million Units for ~~$265 million and $727~~a total of $236 million, representing an average price per Unit of $24.79 and $28.47, respectively. For the three months ended September 30, 2022, this includes 0.2 million Units totaling $7 million that were repurchased in June 2022 but not settled and canceled until July 2022. During the three months ended September 30, 2021, we repurchased and canceled 4.4 million Units for $106 million, representing an average price per Unit of $23.98.$28.96. As of ~~September 30, 2022,~~March 31, 2023, we had authorization remaining to repurchase up to approximately ~~$0.8~~$2.8 billion of our Units.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 13~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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


		Units Held by Baker Hughes		Units Held by GE			Units Held by Baker Hughes		Units Held by GE
		2022	2021	2022	2021		2023	2022	2023	2022
Balance at January 1	Balance at January 1	909,142	723,999	116,548	311,433	Balance at January 1	1,005,960	909,142	—	116,548
Issue of Units to Baker Hughes under equity incentive plan	Issue of Units to Baker Hughes under equity incentive plan	9,069	7,204	—	—	Issue of Units to Baker Hughes under equity incentive plan	5,920	7,730	—	—

Exchange of Units (1)	Exchange of Units (1)	109,548	132,706	(109,548)	(132,706)	Exchange of Units (1)	—	75,957	—	(75,957)
Repurchase and cancellation of Units	Repurchase and cancellation of Units	(25,532)	(4,430)	—	—	Repurchase and cancellation of Units	—	(8,142)	—	—
Balance at September 30		1,002,227	859,480	7,000	178,726
Balance at March 31						Balance at March 31	1,011,881	984,688	—	40,591

(1)When shares of Class B common stock, together with associated Units, are exchanged for shares of Class A common stock, ~~pursuant to the Exchange Agreement,~~ such shares of Class B common stock ~~together with associated Units,~~ are canceled.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 12

Baker Hughes Holdings LLC

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, 2021 $ (2,398) $ (12) $ (281) $ (2,691)
Other comprehensive income before reclassifications (509) (2) (1) (512)
Amounts reclassified from accumulated other comprehensive loss 35 3 19 57
Deferred taxes — — (13) (13)
Other comprehensive income (loss) (474) 1 5 (468)
Less: Other comprehensive loss attributable to noncontrolling interests (2) — — (2)
Less: Other adjustments — — 1 1
Balance at September 30, 2022 $ (2,870) $ (11) $ (277) $ (3,158)


	Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss
Balance at December 31, 2022	$	(2,665)	$	(10)	$	(296)	$	(2,971)
Other comprehensive income 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	$	(2,726)	$	(11)	$	(289)	$	(3,026)

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 14~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~


		Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss			Foreign Currency Translation Adjustments		Cash Flow Hedges		Benefit Plans		Accumulated Other Comprehensive Loss
Balance at December 31, 2020		$	(2,096)	$	5	$	(451)	$	(2,542)
Balance at December 31, 2021										Balance at December 31, 2021	$	(2,398)	$	(12)	$	(281)	$	(2,691)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(82)		(6)		47		(41)		Other comprehensive income (loss) before reclassifications	(17)		—		5		(12)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	31		(7)		32		56		Amounts reclassified from accumulated other comprehensive loss	34		1		6		41
Deferred taxes	Deferred taxes	—		—		(1)		(1)		Deferred taxes	—		—		(2)		(2)
Other comprehensive income (loss)		(51)		(13)		78		14
Other comprehensive income										Other comprehensive income	17		1		8		26
Less: Other comprehensive loss attributable to noncontrolling interests	Less: Other comprehensive loss attributable to noncontrolling interests	(1)						(1)		Less: Other comprehensive loss attributable to noncontrolling interests	(1)		—		—		(1)

Balance at September 30, 2021		$	(2,146)	$	(8)	$	(373)	$	(2,527)
Balance at March 31, 2022										Balance at March 31, 2022	$	(2,380)	$	(11)	$	(273)	$	(2,664)

The amounts reclassified from accumulated other comprehensive loss during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ 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 (see "Note 16. Restructuring, Impairment, and Other" for additional details).

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 13

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 11. FINANCIAL INSTRUMENTS

RECURRING FAIR VALUE MEASUREMENTS

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


	March 31, 2023								December 31, 2022
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
Assets
Derivatives	$	—	$	27	$	—	$	27	$	—	$	18	$	—	$	18
Investment securities	1,105		—		—		1,105		748		—		—		748
Total assets	1,105		27		—		1,132		748		18		—		766

Liabilities
Derivatives	—		(88)		—		(88)		—		(86)		—		(86)
Total liabilities	$	—	$	(88)	$	—	$	(88)	$	—	$	(86)	$	—	$	(86)


	March 31, 2023								December 31, 2022
	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)	$	11	$	—	$	—	$	11	$	—	$	—	$	—	$	—
Equity securities	545		549		—		1,094		557		191		—		748
Total	$	556	$	549	$	—	$	1,105	$	557	$	191	$	—	$	748

(1)Gains recorded to earnings related to these securities were $392 million and $12 million for the three months ended March 31, 2023 and 2022, respectively.

(2)As of March 31, 2023, our non-U.S. debt securities are classified as available for sale securities and mature within one year.

As of March 31, 2023 and December 31, 2022, our equity securities with readily determinable fair values are comprised primarily of our investment in C3.ai, Inc. ("C3 AI") of $232 million and $97 million, respectively, and ADNOC Drilling of $860 million and $649 million, respectively. We measured our investments to fair value based on quoted prices in active markets.

As of March 31, 2023, our investment in C3 AI consists of 6,920,476 shares of Class A common stock ("C3 AI Shares"). During the three months ended March 31, 2023, we sold approximately 1.7 million of C3 AI Shares and received proceeds of $46 million.For the three months ended March 31, 2023 and 2022, we recorded a gain of $181 million and a loss of $74 million, respectively, from the net change in fair value of our investment in C3 AI, which is reported in “Other non-operating income (loss), net” in our condensed consolidated statements of income (loss).

As of March 31, 2023, our investment in ADNOC Drilling consists of 800,000,000 shares. For the three months ended March 31, 2023 and 2022, we recorded a gain of $211 million and $85 million, respectively, from the net change in fair value of our investment in ADNOC Drilling, which is reported in “Other non-operating income (loss), net” in our condensed consolidated statements of income (loss).

As of March 31, 2023 and December 31, 2022, $1,105 million and $748 million, respectively, of total investment securities are recorded in "All other current assets."

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 14

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

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, 2023 and December 31, 2022 approximates their carrying value 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, 2023				December 31, 2022
	Assets		Liabilities		Assets		Liabilities
Derivatives accounted for as hedges
Currency exchange contracts	$	—	$	—	$	1	$	—
Interest rate swap contracts	—		(61)		—		(69)

Derivatives not accounted for as hedges
Currency exchange contracts and other	27		(27)		17		(17)


Total derivatives	$	27	$	(88)	$	18	$	(86)

Derivatives are classified in the condensed consolidated statements of financial position depending on their respective maturity date. As of March 31, 2023 and December 31, 2022, $26 million and $17 million of derivative assets are recorded in "All other current assets" and $1 million and $1 million are recorded in "All other assets" in the condensed consolidated statements of financial position, respectively. As of March 31, 2023 and December 31, 2022, $29 million and $17 million of derivative liabilities are recorded in "All other current liabilities" and $59 million and $69 million are recorded in "All other liabilities" of the condensed consolidated statements of financial position, respectively.

FORMS OF HEDGING

Cash Flow Hedges

We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. In addition, we are exposed to interest rate risk fluctuations in connection with long-term debt that we issue from time to time to fund our operations. During the three months ended March 31, 2023, the Company executed interest rate swap contracts designated as cash flow hedges with a notional amount of $375 million in order to hedge the Company's expected exposure in connection with refinancing activities we may undertake in 2023. Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to as "Accumulated Other Comprehensive Income" or "AOCI") and are recorded in earnings in the period in which the hedged transaction occurs. See "Note 10. Members' Equity" for further information on activity in AOCI for cash flow hedges. As of March 31, 2023 and December 31, 2022, the maximum term of derivative instruments that hedge forecasted transactions was approximately one year.

Fair Value Hedges

All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with certain debt. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 15

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2023 and December 31, 2022, we had interest rate swaps with a notional amount of $500 million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk. We concluded that the interest rate swap met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.

Economic Hedges

These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. Economic hedges are marked to fair value through earnings each period.

The following table summarizes the gains (losses) from derivatives not designated as hedges in the condensed consolidated statements of income (loss):


Derivatives not designated as hedging instruments	Condensed consolidated statements of income (loss) caption	Three Months Ended March 31,
		2023		2022
Currency exchange contracts (1)	Cost of goods sold	$	3	$	(2)
Currency exchange contracts	Cost of services sold	2		3
Commodity derivatives	Cost of goods sold	1		9

Total (2)		$	6	$	10

(1)Excludes losses of nil and gains of $1 million on embedded derivatives for the three months ended March 31, 2023 and 2022, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges.

(2)The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the economically hedged items in the current and future periods.

NOTIONAL AMOUNT OF DERIVATIVES

The notional amount of a derivative is the number of units of the underlying. A substantial majority of the outstanding notional amount of $4.3 billion and $3.8 billion at March 31, 2023 and December 31, 2022, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to execute these contracts with the same counterparty to reduce our exposure. The notional amount of these derivative instruments do not generally represent cash amounts exchanged by us and the counterparties, but rather the nominal amount upon which changes in the value of the derivatives are measured.

COUNTERPARTY CREDIT RISK

Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 16

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 12. ~~FINANCIAL INSTRUMENTS~~REVENUE RELATED TO CONTRACTS WITH CUSTOMERS

~~RECURRING FAIR VALUE MEASUREMENTS~~DISAGGREGATED REVENUE

~~Our assets~~We disaggregate our OFSE and ~~liabilities measured at fair value on a recurring basis consists~~IET segment revenue from contracts with customers by product lines. See "Note 13. Segment Information" for further details.


	Three Months Ended March 31,
Total Revenue	2023		2022
Well Construction	$	1,061	$	883
Completions, Intervention & Measurements	909		781
Production Solutions	938		825
Subsea & Surface Pressure Systems	670		528
Oilfield Services & Equipment	3,577		3,017
Gas Technology - Equipment	827		543
Gas Technology - Services	591		581
Total Gas Technology	1,418		1,124
Condition Monitoring	140		126
Inspection	254		212
Pumps, Valves & Gears	201		221
PSI & Controls	125		136
Total Industrial Technology	721		694
Industrial & Energy Technology	2,138		1,818
Total	$	5,716	$	4,835

In addition, management views OFSE segment revenue from contracts with customers by geographic region:


	Three Months Ended March 31,
Oilfield Services & Equipment Geographic Revenue	2023		2022
North America	$	992	$	823
Latin America	661		440
Europe/CIS/Sub-Saharan Africa	581		660
Middle East/Asia	1,345		1,094
Oilfield Services & Equipment	$	3,577	$	3,017

REMAINING PERFORMANCE OBLIGATIONS

As of ~~derivative instruments~~March 31, 2023, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $29.6 billion. As of March 31, 2023, we expect to recognize revenue of approximately 60%, 72% and ~~investment securities.~~
September 30, 2022 December 31, 2021
Level 1 Level 2 Level 3 Net Balance Level 1 Level 2 Level 3 Net Balance
Assets
Derivatives $ — $ 60 $ — $ 60 $ — $ 29 $ — $ 29
Investment securities 848 — 1 849 1,033 — 8 1,041
Total assets 848 60 1 909 1,033 29 8 1,070
Liabilities
Derivatives — (119) — (119) — (49) — (49)
Total liabilities $ — $ (119) $ — $ (119) $ — $ (49) $ — $ (49)

~~There were no transfers~~90% of the total remaining performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to ~~or from, Level 3 during~~complete as well as the ~~nine months ended September 30, 2022.~~

~~The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:~~

2022 2021
Balance at January 1 $ 8 $ 30
Proceeds at maturity (7) (21)
Balance at September 30 $ 1 $ 9

~~The most significant unobservable input used in~~amount to be received as we fulfill the valuation of our Level 3 instruments is the discount rate. Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value of ourrelated remaining performance obligations.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 15

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

investment securities. There are no unrealized gains or losses recognized in the condensed consolidated statement of income (loss) on account of any Level 3 instrument still held at the reporting date.

September 30, 2022 December 31, 2021
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)
$ 1 $ — $ — $ 1 $ 8 $ — $ — $ 8
Equity securities 556 292 — 848 579 455 (1) 1,033
Total $ 557 $ 292 $ — $ 849 $ 587 $ 455 $ (1) $ 1,041

~~(1)~~Losses recorded to earnings related to these securities were $52 million and $141 million for the three months ended September 30, 2022 and 2021, respectively, and $170 million and $954 million for the nine months ended September 30, 2022 and 2021, respectively.

~~(2)As of September 30, 2022 and December 31, 2021, our non-U.S. debt securities are classified as available for sale securities and mature within one year.~~

As of September 30, 2022 and December 31, 2021, our equity securities with readily determinable fair values are comprised primarily of our investment in C3.ai, Inc. ("C3 AI") of $108 million and $270 million, respectively, and ADNOC Drilling of $738 million and $741 million, respectively. We measured our investments to fair value based on quoted prices in active markets.

As of September 30, 2022 and December 31, 2021, our investment in C3 AI consists of 8,650,476 shares, of C3 AI Class A common stock ("C3 AI Shares"). There were no C3 AI Shares sold during the three and nine months ended September 30, 2022 and the three months ended September 30, 2021. During the nine months ended September 30, 2021, we sold approximately 2.2 million of C3 AI Shares and received proceeds of $145 million. For the three months ended September 30, 2022 and 2021, we recorded a loss of $50 million and $140 million, respectively, and for the nine months ended September 30, 2022 and 2021, we recorded a loss of $162 million and $955 million, respectively, from the net change in fair value of our investment in C3 AI, which is reported in “Other non-operating loss, net” in our condensed consolidated statements of income (loss).

As of September 30, 2022 and December 31, 2021, our investment in ADNOC Drilling consists of 800,000,000 shares. We recorded a loss of $2 million for both the three and nine months ended September 30, 2022, from the net change in fair value of our investment in ADNOC Drilling, which is reported in “Other non-operating loss, net” in our condensed consolidated statements of income (loss).

~~As of September 30, 2022 and December 31, 2021, $849 million and $1,041 million of total investment securities are recorded in "All other current assets," respectively.~~

~~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 September 30, 2022 and December 31, 2021 approximates their carrying value as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 9. Borrowings."

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 16~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~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.~~

September 30, 2022 December 31, 2021
Assets Liabilities Assets Liabilities
Derivatives accounted for as hedges
Currency exchange contracts $ — $ (2) $ — $ (3)
Interest rate swap contracts — (70) — (10)
Derivatives not accounted for as hedges
Currency exchange contracts and other 60 (47) 29 (36)
Total derivatives $ 60 $ (119) $ 29 $ (49)

Derivatives are classified in the condensed consolidated statements of financial position depending on their respective maturity date. As of September 30, 2022 and December 31, 2021, $59 million and $28 million of derivative assets are recorded in "All other current assets" and $1 million and $1 million are recorded in "All other assets" in the condensed consolidated statements of financial position, respectively. As of September 30, 2022 and December 31, 2021, $46 million and $39 million of derivative liabilities are recorded in "All other current liabilities" and $73 million and $10 million are recorded in "All other liabilities" of the condensed consolidated statements of financial position, respectively.

~~FORMS OF HEDGING~~

~~Cash Flow Hedges~~

~~Fair Value Hedges~~

As of September 30, 2022 and December 31, 2021, we had interest rate swaps with a notional amount of $500 million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk. We concluded that the interest rate swap met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q |~~ 17

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~Economic Hedges~~

~~The following table summarizes the gains (losses) from derivatives not designated as hedges in the condensed consolidated statements of income (loss):~~

Derivatives not designated as hedging instruments Condensed consolidated statement of income caption Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Currency exchange contracts (1)
Cost of goods sold $ 6 $ (2) $ (4) $ 7
Currency exchange contracts Cost of services sold 22 8 36 —
Commodity derivatives Cost of goods sold (10) — (7) 5
Other derivatives Other non-operating loss, net — — 2 —
Total (2)
$ 18 $ 6 $ 27 $ 12

~~(1)~~Excludes gains of $14 million and $2 million on embedded derivatives for the three months ended September 30, 2022 and 2021, respectively, and gains of $14 million and $5 million during the nine months ended September 30, 2022 and 2021, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges.

~~(2)The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the economically hedged items in the current and future periods.~~

~~NOTIONAL AMOUNT OF DERIVATIVES~~

The notional amount of a derivative is the number of units of the underlying. A substantial majority of the outstanding notional amount of $3.7 billion and $3.9 billion at September 30, 2022 and December 31, 2021, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to execute these contracts with the same counterparty to reduce our exposure. The notional amount of these derivative instruments do not generally represent cash amounts exchanged by us and the counterparties, but rather the nominal amount upon which changes in the value of the derivatives are measured.

~~COUNTERPARTY CREDIT RISK~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 18~~

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 13. SEGMENT INFORMATION

~~As of September 30, 2022, our reportable segments, which are the same as our operating~~The Company's segments are ~~organized based on~~determined as those operations whose results are reviewed regularly by the ~~nature of markets~~chief operating decision maker ("CODM"), who is our Chief Executive Officer, in deciding how to allocate resources and ~~customers.~~assess performance. We report our operating results through ~~our four~~two operating segments, ~~that consist~~Oilfield Services & Equipment and Industrial & Energy Technology. Each segment is organized and managed based upon the nature of our markets and customers and consists of similar products and ~~services within each segment.~~services. These products and services operate across upstream oil and gas and broader energy and industrial markets.

OILFIELD SERVICES & EQUIPMENT ("~~OFS"~~OFSE")

Oilfield Services & Equipment provides ~~discrete~~ products and ~~services, as well as integrated well~~ services for onshore and offshore oilfield operations across the lifecycle of a well, ranging from ~~drilling, evaluation, completion,~~exploration, appraisal, and development, to production, rejuvenation, and ~~intervention. Products and services include~~decommissioning. OFSE is organized into four product lines: Well Construction, which encompasses drilling services, ~~including directional drilling, measurement while~~drill bits, and drilling & ~~logging while drilling, diamond~~completions fluids; Completions, Intervention, and ~~tri-cone drill bits, drilling and~~Measurements, which encompasses well completions, ~~fluids, wireline services, downhole completion tools and systems, wellbore intervention tools and services,~~ pressure pumping, ~~oilfield~~ and ~~industrial chemicals and~~wireline services; Production Solutions, which spans artificial lift ~~technologies, including electrical submersible pumps~~systems and ~~surface pumping systems.~~

~~OILFIELD EQUIPMENT ("OFE")~~

~~Oilfield Equipment provides a broad portfolio of products~~oilfield & industrial chemicals; and Subsea & Surface Pressure Systems, which encompasses subsea projects services ~~required to facilitate the safe~~ and ~~reliable control and flow of hydrocarbons from the wellhead to the production facilities. The Oilfield Equipment portfolio has solutions for the subsea, offshore~~drilling systems, surface ~~and onshore operating environments. Products and services include subsea and surface wellheads,~~ pressure control, and ~~production systems and services,~~ flexible pipe ~~systems for offshore~~systems. Beyond its traditional oilfield concentration, OFSE is expanding its capabilities and ~~onshore applications, and life-of-field solutions including well intervention and decommissioning solutions, covering~~technology portfolio to meet the ~~entire life cycle~~challenges of a ~~field.~~net-zero future. These efforts include expanding into new energy areas such as geothermal and CCUS, strengthening its digital architecture and addressing key energy market themes.

~~TURBOMACHINERY~~INDUSTRIAL & ~~PROCESS SOLUTIONS~~ENERGY TECHNOLOGY ("~~TPS"~~IET")

~~Turbomachinery~~Industrial & ~~Process Solutions~~Energy Technology provides technology solutions and services for mechanical-drive, compression and power-generation applications across the energy industry, including oil and gas, liquefied natural gas ("LNG") operations, downstream refining and petrochemical ~~segments,~~markets, as well as lower carbon solutions to broader energy and industrial sectors. The Turbomachinery & Process Solutions portfolio includes drivers (aero-derivative gas turbines, heavy-duty gas turbines and synchronous and induction electric motors), compressors (centrifugal and axial, direct drive high speed, integrated, subsea compressors, turbo expanders and reciprocating), turnkey solutions (industrial modules and waste heat recovery), pumps, valves, and compressed natural gas ("CNG") and small-scale LNG solutions.

~~DIGITAL SOLUTIONS ("DS")~~

~~Digital Solutions~~IET also provides equipment, software, and services ~~for~~that serve a wide range of industries including ~~oil~~petrochemical and ~~gas, power generation, aerospace,~~refining, nuclear, aviation, automotive, mining, cement, metals, pulp and ~~transportation. The offerings include a number of products~~paper, and ~~solutions that provide industrial asset management capabilities, including sensor-based process measurement, machine health~~food and ~~condition monitoring, asset strategy~~beverage. IET is organized into six product lines - Gas Technology Equipment and ~~management, control systems,~~Gas Technology Services, collectively referred to as ~~well~~Gas Technology, and Condition Monitoring, Inspection, Pumps Valves & Gears, and PSI & Controls, collectively referred to as ~~non-destructive testing and inspection, and pipeline integrity solutions.~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 19~~

Industrial Technology.

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~SEGMENT RESULTS~~

~~Segment revenue~~Revenue and ~~profit~~operating income for each segment are determined based on the internal performance measures used by the ~~Company~~CODM to assess the performance of each segment in a financial period. ~~Summarized financial information is shown in the following tables. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods.~~

Three Months Ended September 30, Nine Months Ended September 30,
Segment revenue 2022 2021 2022 2021
Oilfield Services $ 2,842 $ 2,419 $ 8,019 $ 6,976
Oilfield Equipment 561 603 1,630 1,867
Turbomachinery & Process Solutions 1,438 1,562 4,076 4,675
Digital Solutions 528 510 1,526 1,499
Total $ 5,369 $ 5,093 $ 15,251 $ 15,017

The performance of our operating segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes before the following: net interest expense, net other non-operating ~~loss,~~income (loss), corporate expenses, restructuring, impairment and other charges, inventory impairments, ~~separation related costs~~ and certain gains and losses not allocated to the operating segments. Consistent accounting policies have been applied by all segments within the Company, for all reporting periods. Intercompany revenue and expense amounts have been eliminated within each segment to report on the basis that management uses internally for evaluating segment performance.

Three Months Ended September 30, Nine Months Ended September 30,
Segment income (loss) before income taxes 2022 2021 2022 2021
Oilfield Services $ 330 $ 190 $ 812 $ 505
Oilfield Equipment (6) 14 (26) 45
Turbomachinery & Process Solutions 262 278 705 705
Digital Solutions 20 26 53 75
Total segment 606 508 1,544 1,330
Corporate (103) (105) (316) (324)
Inventory impairment (1)
— — (31) —
Restructuring, impairment and other (230) (14) (653) (219)
Separation related (5) (11) (23) (53)
Other non-operating loss, net (60) (102) (657) (791)
Interest expense, net (65) (67) (188) (205)
Income (loss) before income taxes $ 144 $ 209 $ (323) $ (260)

~~(1)Inventory impairments are reported~~Summarized financial information for the Company's segments is shown in the ~~"Cost of goods sold" caption of the condensed consolidated statements of income (loss).~~following tables.


	Three Months Ended March 31,
Revenue	2023		2022
Oilfield Services & Equipment	$	3,577	$	3,017
Industrial & Energy Technology	2,138		1,818
Total	$	5,716	$	4,835

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 2018

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements


	Three Months Ended March 31,
Income before income taxes	2023		2022
Oilfield Services & Equipment	$	371	$	213
Industrial & Energy Technology	241		241
Total segment	612		453
Corporate	(100)		(105)

Inventory impairment	(18)		—
Restructuring, impairment and other	(56)		(70)
Other non-operating income (loss), net	386		(28)
Interest expense, net	(64)		(64)
Income before income taxes	$	760	$	187

The following table presents depreciation and amortization by segment:

Three Months Ended September 30, Nine Months Ended September 30,
Segment depreciation and amortization 2022 2021 2022 2021
Oilfield Services $ 185 $ 183 $ 587 $ 578
Oilfield Equipment 20 22 60 81
Turbomachinery & Process Solutions 28 30 87 90
Digital Solutions 16 22 57 66
Total segment 249 257 791 815
Corporate 5 5 15 17
Total $ 254 $ 262 $ 806 $ 832

~~OTHER EVENTS~~

In the third quarter of 2022, we announced a restructuring and reorganization effective October 1, 2022, to create two reportable segments focused on different growth profiles and designed to simplify our operations and enhance profitability while positioning the Company for strategic optionality. These two reportable segments, which will be the same as our operating segments, are detailed below:

~~Oilfield Services & Equipment (“OFSE”) integrates the current Oilfield Services and Oilfield Equipment segments.~~

~~Industrial & Energy Technology (“IET”) integrates the current Turbomachinery & Process Solutions and Digital Solutions segments.~~


	Three Months Ended March 31,
Depreciation and amortization	2023		2022
Oilfield Services & Equipment	$	208	$	222
Industrial & Energy Technology	56		51
Total segment	264		272
Corporate	5		4
Total	$	269	$	277

NOTE 14. RELATED PARTY TRANSACTIONS

~~RELATED PARTY TRANSACTIONS WITH GE~~

During the second quarter of 2022, GE's ownership interest in us was reduced to less than 5%. As a result, considering all aspects of our relationship with GE, as of June 30, 2022, we no longer consider GE a related party. Below we provide our disclosures for purchases and sales with GE through June 30, 2022.

We had purchases with GE and its affiliates of $293 million during the six months ended June 30, 2022, and $232 million and $567 million during the three and nine months ended September 30, 2021, respectively. In addition, we sold products and services to GE and its affiliates for $83 million during the six months ended June 30, 2022, and $46 million and $131 million during the three and nine months ended September 30, 2021, respectively.

~~OTHER RELATED PARTIES~~

We have an aeroderivative joint venture ("Aero JV") we formed with GE in 2019. The Aero JV is jointly controlled by GE and us, each with ownership interest of 50%, and therefore, we do not consolidate the ~~JV nor does GE.~~JV. We had purchases with the Aero JV of ~~$106~~$114 million and ~~$134~~$108 million during the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $360 million and $421 million during the nine months ended September 30, 2022 and 2021,~~ respectively. We have ~~$51~~$55 million and ~~$86~~$110 million of accounts payable at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, for goods and services provided by the Aero JV in the ordinary course of business. Sales of products and services and related receivables with the Aero JV were immaterial for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

The Company also has ~~$166~~$85 million and ~~$67~~$16 million of current receivables at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, from Baker Hughes.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 21~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

NOTE 15. COMMITMENTS AND CONTINGENCIES

LITIGATION

We are subject to legal proceedings arising in the ordinary course of our business. Because legal proceedings are inherently uncertain, we are unable to predict the ultimate outcome of such matters. We record a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. Based on the opinion of management, we do not expect the ultimate outcome of currently pending legal proceedings to have a material adverse effect on our results of operations, financial position or cash flows. However, there can be no assurance as to the ultimate outcome of these matters.

In January 2013, INEOS and Naphtachimie initiated expertise proceedings in Aix-en-Provence, France arising out of a fire at a chemical plant owned by INEOS in Lavera, France, which resulted in a 15-day plant shutdown and destruction of a steam turbine, which was part of a compressor train owned by Naphtachimie. The most recent quantification of the alleged damages is €250 million. Two of the Company's subsidiaries (and 17 other companies) were notified to participate in the proceedings. The proceedings are ongoing, and at this time, there is no indication that the Company's subsidiaries were involved in the incident. Although the outcome of the claims remains uncertain, our insurer has accepted coverage and is defending the Company in the expertise proceeding.

On July 31, 2018, International Engineering & Construction S.A. ("IEC") initiated arbitration proceedings in New York administered by the International Center for Dispute Resolution ("ICDR") against the Company and its subsidiaries arising out of a series of sales and service contracts entered between IEC and the Company’s subsidiaries for the sale and installation of LNG plants and related power generation equipment in Nigeria ("Contracts"). Prior to the filing of the IEC Arbitration, the Company’s subsidiaries made demands for payment due

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 19

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

under the Contracts. On August 15, 2018, the Company’s subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due under the Contracts. On October 10, 2018, IEC filed a Petition to Compel Arbitration in the United States District Court for the Southern District of New York against the Company seeking to compel non-signatory Baker Hughes entities to participate in the arbitration filed by IEC. The complaint is captioned International Engineering & Construction S.A. et al. v. Baker Hughes, a GE company, LLC, et al. No. 18-cv-09241 ("S.D.N.Y 2018"); this action was dismissed by the Court on August 13, 2019. In the arbitration, IEC alleges breach of contract and other claims against the Company and its subsidiaries and seeks recovery of alleged compensatory damages, in addition to reasonable attorneys' fees, expenses and arbitration costs. On March 15, 2019, IEC amended its request for arbitration to alleged damages of $591 million of lost profits plus unspecified additional costs based on alleged non-performance of the contracts in dispute. The arbitration hearing was held from December 9, 2019 to December 20, 2019. On March 3, 2020, IEC amended their damages claim to $700 million of alleged loss cash flow or, in the alternative, $244.9 million of lost profits and various costs based on alleged non-performance of the contracts in dispute, and in addition $4.8 million of liquidated damages, $58.6 million in take-or-pay costs of feed gas, and unspecified additional costs of rectification and take-or-pay future obligations, plus unspecified interest and attorneys' fees. On May 3, 2020, the arbitration panel dismissed IEC's request for take-or-pay damages. On May 29, 2020, IEC quantified their claim for legal fees at $14.2 million and reduced their alternative claim from $244.9 million to approximately $235 million. The Company and its subsidiaries have contested IEC’s claims and are pursuing claims for compensation under the contracts. On October 31, 2020, the ICDR notified the arbitration panel’s final award, which dismissed the majority of IEC’s claims and awarded a portion of the Company’s claims. On January 27, 2021, IEC filed a petition to vacate the arbitral award in the Supreme Court of New York, County of New York. On March 5, 2021, the Company filed a petition to confirm the arbitral award, and on March 8, 2021, the Company removed the matter to the United States District Court for the Southern District of New York. On November 16, 2021, the court granted the Company's petition to confirm the award and denied IEC's petition to vacate. During the second quarter of 2022, IEC paid the amounts owed under the arbitration award, which had an immaterial impact on the Company’s financial statements. On February 3, 2022, IEC initiated another arbitration proceeding in New York administered by the ICDR against certain of the Company’s subsidiaries arising out of the same project which formed the basis of the first arbitration. On March 25, 2022, the Company's subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts ~~due.~~due; such claims against IEC have now been resolved, with any consideration having an immaterial impact on the Company’s financial statements. At this time, we are not able to predict the outcome of ~~this proceeding.~~the proceeding which is pending against the Company’s subsidiaries.

On March 15, 2019 and March 18, 2019, the City of Riviera Beach Pension Fund and Richard Schippnick, respectively, filed in the Delaware Court of Chancery shareholder derivative lawsuits for and on Baker Hughes'

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 22~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

behalf against GE, the then-current members of the Board of Directors of Baker Hughes and Baker Hughes as a nominal defendant, related to the decision to (i) terminate the contractual prohibition barring GE from selling any of Baker ~~Hughes'~~Hughes’ shares before July 3, 2019; (ii) repurchase $1.5 billion in Baker Hughes' stock from GE; (iii) permit GE to sell approximately $2.5 billion in Baker Hughes' stock through a secondary offering; and (iv) enter into a series of other agreements and amendments that will govern the ongoing relationship between Baker Hughes and GE (collectively, the “2018 Transactions”). The complaints in both lawsuits allege, among other things, that GE, as Baker Hughes' controlling stockholder, and the members of Baker Hughes' Board of Directors breached their fiduciary duties by entering into the 2018 Transactions. The relief sought in the complaints includes a request for a declaration that the defendants breached their fiduciary duties, that GE was unjustly enriched, disgorgement of profits, an award of damages sustained by Baker Hughes, pre- and post-judgment interest, and attorneys’ fees and costs. On March 21, 2019, the Chancery Court entered an order consolidating the Schippnick and City of Riviera Beach complaints under consolidated C.A. No. 2019-0201-AGB, styled in re Baker Hughes, a GE company derivative litigation. On May 10, 2019, Plaintiffs voluntarily dismissed their claims against the members of Baker Hughes' Conflicts Committee, and on May 15, 2019, Plaintiffs voluntarily dismissed their claims against former Baker Hughes director Martin Craighead. On June 7, 2019, the defendants and nominal defendant filed a motion to dismiss the lawsuit on the ground that the derivative plaintiffs failed to make a demand on Baker Hughes' Board of Directors to pursue the claims itself, and GE and Baker Hughes' Board of Directors filed a motion to dismiss the lawsuit on the ground that the complaint failed to state a claim on which relief can be granted. The Chancery Court denied the motions on October 8, 2019, except granted GE’s motion to dismiss the unjust enrichment claim against it. On October 31, 2019, Baker Hughes' Board of Directors designated a Special Litigation Committee and empowered it with full authority to investigate and evaluate the allegations and issues raised in the derivative litigation. The Special Litigation Committee filed a motion to stay the derivative litigation during its investigation. On

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 20

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

December 3, 2019, the Chancery Court granted the motion and stayed the derivative litigation until June 1, 2020. On May 20, 2020, the Chancery Court granted an extension of the stay to October 1, 2020, and on September 29, 2020, the Court granted a further extension of the stay to October 15, 2020. On October 13, 2020, the Special Litigation Committee filed its report with the Court. ~~At this time, we are not able~~On April 17, 2023, the Court granted the Special Litigation Committee’s motion to ~~predict~~terminate the ~~outcome of these claims.~~litigation.

On August 13, 2019, Tri-State Joint Fund filed in the Delaware Court of Chancery, a shareholder class action lawsuit for and on the behalf of itself and all similarly situated public stockholders of Baker Hughes Incorporated ("BHI") against the General Electric Company ("GE"), the former members of the Board of Directors of BHI, and certain former BHI Officers alleging breaches of fiduciary duty, aiding and abetting, and other claims in connection with the combination of BHI and the oil and gas business ("GE O&G") of GE ("the Transactions"). On October 28, 2019, City of Providence filed in the Delaware Court of Chancery a shareholder class action lawsuit for and on behalf of itself and all similarly situated public shareholders of BHI against GE, the former members of the Board of Directors of BHI, and certain former BHI Officers alleging substantially the same claims in connection with the Transactions. The relief sought in these complaints include a request for a declaration that Defendants breached their fiduciary duties, an award of damages, pre- and post-judgment interest, and attorneys’ fees and costs. The lawsuits have been consolidated, and plaintiffs filed a consolidated class action complaint on December 17, 2019 against certain former BHI officers alleging breaches of fiduciary duty and against GE for aiding and abetting those breaches. The December 2019 complaint omitted the former members of the Board of Directors of BHI, except for Mr. Craighead who also served as President and CEO of BHI. Mr. Craighead and Ms. Ross, who served as Senior Vice President and Chief Financial Officer of BHI, remain named in the December 2019 complaint along with GE. The relief sought in the consolidated complaint includes a declaration that the former BHI officers breached their fiduciary duties and that GE aided and abetted those breaches, an award of damages, pre- and post-judgment interest, and attorneys’ fees and costs. On or around February 12, 2020, the defendants filed motions to dismiss the lawsuit on the grounds that the complaint failed to state a claim on which relief could be granted. On or around October 27, 2020, the Chancery Court granted GE’s motion to dismiss, and granted in part the motion to dismiss filed by Mr. Craighead and Ms. Ross, thereby dismissing all of the claims against GE and Ms. Ross, and all but one of the claims against Mr. Craighead. At this time, we are not able to predict the outcome of the remaining claim.

On ~~December 11, 2019, BMC Software,~~or around February 15, 2023, the lead plaintiff and three additional named plaintiffs in a putative securities class action styled The Reckstin Family Trust, et al., v. C3.ai, Inc., et al., No. 4:22-cv-01413-HSG, filed an amended class action complaint (the “Amended Complaint”) in the United States District Court for the Northern District of California. The Amended Complaint names the following as defendants: (i) C3.ai., Inc. (“~~BMC”~~C3 AI”) ~~filed a lawsuit in federal court in~~, (ii) certain of C3 AI’s current and/or former officers and directors, (iii) certain underwriters for the ~~Southern District of Texas against~~C3 AI initial public offering (the “IPO”), and (iv) Baker Hughes, and its President and CEO (who formerly served as a ~~GE company, LLC alleging trademark infringement, unfair competition, and unjust enrichment, arising out~~director on the board of C3 AI). The Amended Complaint alleges violations of the ~~Company’s use~~Securities Act of ~~its new logo~~1933 and ~~affiliated branding. On January 1,~~the Securities Exchange Act of 1934 (the “Exchange Act”) in connection with the IPO and the subsequent period between December 9, 2020 ~~BMC amended its complaint to add Baker Hughes Company.~~and December 2, 2021, during which BHH LLC held equity investments in C3 AI. The ~~relief sought in~~action seeks unspecified damages and the ~~complaint includes a request for~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 23~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~injunctive relief, an~~ award of ~~damages (including punitive damages), pre-~~costs and ~~post-judgment interest, and attorneys’ fees and costs.~~expenses, including reasonable attorneys' fees. At this time, we are not able to predict the outcome of these ~~claims.~~

In December 2020, Baker Hughes received notice that the SEC is conducting a formal investigation that Baker Hughes understands is related to its books and records and internal controls regarding sales of its products and services in projects impacted by U.S. sanctions. Baker Hughes is cooperating with the SEC and providing requested information. Baker Hughes has also initiated an internal review with the assistance of external legal counsel regarding internal controls and compliance related to U.S. sanctions requirements. While Baker Hughes' review remains ongoing, in September 2021, Baker Hughes voluntarily informed the Office of Foreign Assets Control ("OFAC")~~that~~non-U.S. Baker Hughes affiliates in two foreign countries appear to have received payments, involving U.S. touchpoints, that are subject to debt restrictions pursuant to applicable U.S. sanctions laws. In February 2022, OFAC informed Baker Hughes that it has issued a cautionary letter and that it will not pursue a civil monetary penalty or further enforcement action. The cautionary letter reflects OFAC’s final enforcement response to Baker Hughes' voluntary self-disclosure. Baker Hughes provided copies of its correspondence with OFAC to the SEC. As the SEC investigation is ongoing, Baker Hughes cannot anticipate the timing, outcome or possible impact of the SEC investigation or review, financial or otherwise.proceedings.

We insure against risks arising from our business to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims. Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability, general liability and workers compensation.

OTHER

In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees. We also provide a guarantee to GE Capital on behalf of a customer who entered into a financing arrangement with GE Capital. Total off-balance sheet arrangements were approximately ~~$4.3~~$4.7 billion at ~~September 30, 2022.~~March 31, 2023. It is not practicable to estimate the fair value of these financial instruments. As of ~~September 30, 2022,~~March 31, 2023, none of the off-balance

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 21

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

sheet arrangements either has, or is likely to have, a material effect on our financial position, results of operations or cash flows.

We sometimes enter into consortium or similar arrangements for certain projects primarily in our ~~Oilfield Equipment~~OFSE segment. Under such arrangements, each party is responsible for performing a certain scope of work within the total scope of the contracted work, and the obligations expire when all contractual obligations are completed. The failure or inability, financially or otherwise, of any of the parties to perform their obligations could impose additional costs and obligations on us. These factors could result in unanticipated costs to complete the project, liquidated damages or contract disputes.

NOTE 16. RESTRUCTURING, IMPAIRMENT AND OTHER

We recorded restructuring, impairment and other charges of ~~$230~~$56 million and ~~$653~~$70 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and $14 million and $219 million during the three and nine months ended September 30, 2021,~~ respectively.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 24~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

RESTRUCTURING AND IMPAIRMENT CHARGES

We recorded restructuring and impairment charges of ~~$146 million and $174~~$56 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023. In the third quarter of 2022, ~~respectively. The~~we announced a restructuring plan in conjunction with a change in our operating segments that was effective October 1, 2022 (the "2022 Plan"). As a result, we continued to incur charges ~~relate~~in the first quarter of 2023 related to the 2022 Plan primarily tofor employee termination expenses driven by actions taken by the Company to facilitate the reorganization into two segments ~~that is effective October 1, 2022.~~and corporate restructuring. In addition, ~~property, plant and equipment ("PP&E"~~under a new plan (the "2023 Plan") ~~impairments and other~~we incurred costs ~~were recorded~~ related to exit activities at specific locations in our ~~OFE and OFS~~ segments to align with our current market outlook and rationalize our manufacturing supply chain footprint. ~~See "Note 13. Segment Information" for further information on the change~~These actions also included inventory impairments of $18 million recorded in ~~segments.~~

"Cost of goods sold" in our condensed consolidated statements of income (loss). We ~~recorded restructuring and impairment~~expect to incur additional charges of ~~$14~~approximately $145 million in 2023 in connection with these restructuring plans, and ~~$144 million for~~currently expect these plans to be substantially completed by the ~~three and nine months ended September 30, 2021, respectively. These~~end of 2023, with the majority of charges were predominately in our OFS segment and related primarily to employee termination expenses, and product line rationalization, including facility closures and related expenses such as PP&E impairments, and includes any gains onincurred within the ~~dispositions~~first half of ~~certain PP&E impaired as a consequence of previous exit activities.~~2023.

The following table presents restructuring and impairment charges by the impacted segment, however, these charges are not included in the reported segment results:

Three Months Ended September 30, Nine Months Ended September 30,
Segments 2022 2021 2022 2021
Oilfield Services $ 40 $ 14 $ 61 $ 119
Oilfield Equipment 62 3 58 4
Turbomachinery & Process Solutions 6 (3) 8 11
Digital Solutions 19 — 20 3
Corporate 19 — 27 7
Total $ 146 $ 14 $ 174 $ 144


	Three Months Ended March 31,
Segments	2023		2022
Oilfield Services & Equipment	$	15	$	2
Industrial & Energy Technology	14		(1)
Corporate	27		3
Total	$	56	$	4

The following table presents restructuring and impairment charges by ~~type:~~type, and includes gains on the dispositions of certain property, plant and equipment previously impaired as a consequence of exit activities:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Charges by Type	Charges by Type	2022		2021		2022		2021		Charges by Type	2023		2022
Property, plant & equipment, net	Property, plant & equipment, net	$	65	$	(1)	$	59	$	21	Property, plant & equipment, net	$	15	$	(9)
Employee-related termination costs	Employee-related termination costs	77		1		106		94		Employee-related termination costs	31		8

Other incremental costs	Other incremental costs	4		14		9		29		Other incremental costs	10		5
Total	Total	$	146	$	14	$	174	$	144	Total	$	56	$	4

OTHER CHARGES

We recorded other charges of ~~$84 million~~nil and ~~$478~~$66 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively.

Other charges for the three months ended ~~September 30,~~March 31, 2022 were ~~related to the impairment of certain long-lived assets, primarily PP&E of $62 million and intangibles of $17 million,~~predominately in our ~~OFE~~IET segment for ~~the subsea production systems ("SPS") business due to a decrease in the estimated future cash flows driven by a decline in our long-term market outlook for this business.~~

Other charges for the nine months ended September 30, 2022, were primarily associated with our Russia operations that were recorded in the second quarter of 2022. As a result of the ongoing conflict between Russia and Ukraine that began in February of 2022, governments in the U.S., United Kingdom, European Union, and other

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 2522

Baker Hughes Holdings LLC

Notes to Unaudited Condensed Consolidated Financial Statements

countries enacted sanctions against Russia and certain Russian interests. On March 19, 2022, we suspended any new investments in our Russia operations but attempted to continue to fulfill our contractual obligations while complying with all applicable laws and regulations. Over the coursea write-off of the second quarter of 2022, we closely monitored the developments in Ukraine and Russia and changes to sanctions all of which continued to make ongoing operations increasingly complex and significantly more challenging. As a result, in the second quarter of 2022, we committed to a plan to sell our Oilfield Services Russia business. See “Note 17. Businesses Held for Sale” for further information. In addition, given that some of our activities are prohibited under applicable sanctions and almost all of our activities are unsustainable in the current environment, we took actions to suspend substantially all of our operational activities related to Russia. These actions resulted in other charges of $334 million recorded in the second quarter of 2022 primarily associated with the suspension of contracts including all our TPS LNG contracts, and the impairment of assets consisting primarily of contract assets, PP&E and reserve for accounts receivable. In addition to these charges, we recorded inventory impairments in the second quarter of 2022 of $31 million primarily in TPS as part of suspending our Russia operations, which are reported in the “Cost of goods sold” caption in the condensed consolidated statement of income (loss).

~~During the three months ended September 30, 2021, there were no other charges incurred.During the nine months ended September 30, 2021, we incurred other charges of $75 million primarily related to certain litigation matters in our TPS segment~~an equity method investment and the release of foreign currency translation ~~adjustments for certain restructured product lines in our DS segment.~~adjustments. The 2022 charges also include separation related costs.

NOTE 17. ~~BUSINESSES~~BUSINESS HELD FOR SALE

The Company classifies assets and liabilities as held for sale (“disposal group”) when management commits to a plan to sell the disposal group and concludes that it meets the relevant criteria. Assets held for sale are measured at the lower of their carrying value or fair value less costs to sell. Any loss resulting from the measurement is recognized in the period the held for sale criteria are met. Conversely, gains are not recognized until the date of sale.

During the second quarter of 2022, the OFS Russia business met the criteria to be classified as held for sale and was measured and reported at the lower of its carrying value or fair value less costs to sell, which resulted in the recognition of a loss of $426 million, which included foreign currency translation adjustment gains partially offset by costs associated with selling the business. The loss was recorded in “Other non-operating loss, net” in our condensed consolidated statements of income (loss). On August 1, 2022, we entered into an agreement to sell our OFS Russia business to our local management. As of September 30, 2022, the OFS Russia business continues to meet the criteria to be classified as held for sale. We expect to complete the sale by the end of 2022 subject to regulatory approval.

In July 2022, we entered into an agreement with GE to sell our Nexus Controls business, a product line in our ~~Digital Solutions~~IET segment, specializing in scalable industrial controls systems, safety systems, hardware, and software cybersecurity solutions and ~~services.Based~~services, and on ~~preliminary estimates, the carrying value is expected to approximate the fair value of the business, less costs to sell. We expect to complete~~April 3, 2023, we completed the sale resulting in ~~mid-2023 subject to customary conditions, including regulatory approvals.~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 26~~

~~Baker Hughes Holdings LLC~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

an immaterial gain.

The following table presents financial information related to the assets and liabilities of ~~the businesses~~our Nexus Controls business classified as held for sale and reported in “All other current assets” and “All other current liabilities” in our condensed consolidated ~~statement~~statements of financial position as of ~~September 30, 2022.~~March 31, 2023.

Assets and liabilities of business held for sale OFS Russia DS Nexus Controls Total
Assets
Current receivables $ 57 $ 49 $ 106
Inventories 76 36 112
Property, plant and equipment 161 3 164
Goodwill 161 231 392
Other assets 18 8 26
Loss on net assets of business held for sale (426) — (426)
Total assets of business held for sale 47 327 374
Liabilities
Accounts payable 42 33 75
All other current liabilities 4 56 60
Other liabilities 1 8 9
Total liabilities of business held for sale 47 97 144
Total net assets of business held for sale $ — $ 230 $ 230


Assets and liabilities of business held for sale	Nexus Controls
Assets
Current receivables	$	48

Inventories	40
Property, plant and equipment	2
Goodwill	230
Other assets	9

Total assets of business held for sale	329

Liabilities

Accounts payable	18
Progress collections and deferred income	39
All other current liabilities	19
Other liabilities	7
Total liabilities of business held for sale	83
Total net assets of business held for sale	$	246

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 2723

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the condensed consolidated financial statements and the related notes included in Item 1 ~~thereto.~~

~~EXECUTIVE SUMMARY~~thereto, as well as our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Annual Report").

We are an energy technology company with a broad and diversified portfolio of technologies and services that span the energy and industrial value chain. We conduct business in more than 120 countries and employ approximately ~~55,000~~56,000 employees. ~~Through September 30, 2022, we operated~~We operate through our ~~four~~two business segments: Oilfield Services ~~("OFS"), Oilfield~~& Equipment ("~~OFE"~~OFSE")~~, Turbomachinery~~ and Industrial & ~~Process Solutions~~Energy Technology ("~~TPS"), and Digital Solutions ("DS"~~IET"). We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments.

EXECUTIVE SUMMARY

Market Conditions

As we look ~~to the fourth quarter of 2022 and into~~at 2023, the macro ~~outlook has grown increasingly uncertain. The global economy is dealing~~environment remains volatile with ~~strong inflationary pressures, a rising interest rate environment, and fluctuations in global currencies.~~elevated recession risk for major developed economies. Despite these ~~economic~~ challenges, we ~~remain constructive on~~expect the ~~outlook~~supply-demand balance in the global oil markets to gradually tighten over the course of the year. Factors driving this include China’s economy recovering, demand continuing to grow in countries outside the Organization for Economic Cooperation and Development, and the Organization of the Petroleum Exporting Countries (OPEC+) remaining proactive in maintaining adequate and stable oil ~~and gas and believe that underlying fundamentals remain supportive of~~price levels. We expect this macro backdrop to still support a ~~multi-year upturn~~double-digit increase in global upstream ~~spending. In~~spending in 2023, with multiple international projects being executed and the oil market, we expect continued price volatility as demand growth likely softens under the weight of higher interest rates and inflationary pressures. However, we expect supply constraints and production discipline to largely offset any demand weakness.

In the natural gas and LNG markets, prices remain elevated, as a multitude of factors increase tensions on an already stressed global gas market. Europe’s surging demand for LNG has redirected cargos from other regions and created a tight global market that could get even tighter in 2023. This situation has resulted in record high LNG prices but has also slowed down switching from coal-to-gas in some developing countries.offshore development pipeline growing.

We believe that ~~significant investment~~the current spending cycle is ~~still required over~~more durable and less sensitive to commodity price swings relative to prior cycles. Factors driving this extended cycle include financially strong operator balance sheets, disciplined capital spending focused on returns versus growth, and both independent oil companies and national oil companies balancing modest production growth with longer-term investments in new energy.

Another notable characteristic of this cycle is the ~~next five~~continued shift towards the development of natural gas and LNG. As the world increasingly recognizes the crucial role natural gas is expected to ~~ten years to ensure natural gas’ position as a key part of~~play in the energy ~~transition. However, while~~transition, serving as both a transition and destination fuel, the current price environment is attractive for new projects, this is also a pivotal time for the industry, with price-related demand destruction occurring in some markets and LNG developers facing inflationary pressures and a higher cost of capital for new projects.

~~Given the dynamic macro backdrop, we are focused on preparing~~case for a ~~range~~multi-decade growth opportunity in gas is steadily improving. This is driving operators of scenarios and executing on what is within our control. During the third quarter of 2022, we announced a restructuring and re-segmentation of the Company into two reporting segments, OFSE and IET, effective October 1, 2022. This re-segmentation is designedall sizes to simplify and streamline our organizational structure, and create better flexibility and economies of scale across the two business segments. For OFSE, one area of focus will be right sizing OFE through facility rationalization, removing management layers, and integrating multiple functions and capabilities with OFS. For IET, we expect commercial and technological benefits from closer integrationdedicate more spending towards natural gas development, as well as ~~the benefit of cost out programs. We expect these changes to improve the long-term optionality~~LNG projects and ~~growth opportunities for Baker Hughes as our markets~~associated infrastructure.

Financial Results and ~~customers continue to evolve.~~

In parallel, we continue to invest in the Baker Hughes portfolio through early-stage new energy investments and strategic acquisitions. In the third quarter of 2022, we announced several strategic acquisitions that will complement our current portfolio and enhance our strategic position. On October 7, 2022, theKey Company closed on an agreement to acquire the Power Generation division of BRUSH Group (“BRUSH”). BRUSH is an established equipment manufacturer that specializes in electric power generation and management for the industrial and energy sectors, which will compliment TPS’ existing portfolio. Other transactions announced include the acquisitions of Quest Integrity and AccessESP, which will enhance our inspection capabilities and broadens our electrical submersible pump ("ESP") technology portfolio.Initiatives

In the ~~third~~first quarter of ~~2022,~~2023, we generated revenue of ~~$5,369~~$5,716 million compared to ~~$5,093~~$4,835 million in the ~~third~~first quarter of ~~2021.~~2022. The increase in revenue was driven ~~primarily~~ by increased activity in ~~the OFS~~our OFSE and ~~DS segments, partially offset by lower volume in the TPS and OFE~~IET segments. Operating income in the ~~third~~first quarter of ~~2022~~2023 was ~~$269~~$438 million compared to ~~$378~~$279 million in the ~~third~~first quarter of ~~2021.~~2022. The ~~decrease~~increase in operating income was driven ~~by higher restructuring, impairment and other charges, partially offset~~primarily by higher segment operating income ~~in OFS.~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 28~~

from OFSE. Income before income taxes was ~~$144~~$760 million for the ~~third~~first quarter of ~~2022,~~2023, which included ~~restructuring, impairment and other charges~~a gain of ~~$230 million, and a loss of $52~~$392 million from the change in fair value on certain equity ~~securities, recorded as other non-operating loss.~~investments. In the ~~third~~first quarter of ~~2021,~~2022, income before income taxes was ~~$209~~$187 million, which included ~~restructuring, impairment and other charges~~a gain of ~~$14~~$11 million ~~and also included a $140 million loss~~ from the change in fair value on certain equity ~~securities, recorded as other non-operating loss.~~investments.

~~The invasion~~Our results in the first quarter of ~~Ukraine~~2023 were impacted by ~~Russia and~~ the ~~sanctions imposed in response to this crisis have increased the level~~discontinuation of ~~economic and political uncertainty. As we announced on March 19, 2022, we suspended any new investments for~~ our Russia ~~operations. Over the course of the second quarter of 2022, changes to sanctions continued to make ongoing~~ operations increasingly complex and significantly more challenging. As a result, we committed to a plan to sell our OFS Russia business, and we took actions to suspend substantially all of our operational activities related to Russia across the Company including suspending work on equipment and service contractsthat occurred in ~~Russia. During the third quarter of 2022, we announced we entered into an agreement to sell our OFS Russia business to local management.~~2022. Russia represented approximately ~~1% and 2%~~4% of our total revenue in the first quarter of 2022, the majority of which was in our OFSE segment.

In 2022, we announced a reorganization of the Company from four to two operating segments, OFSE and IET. To date, we have made great progress on this transformation, which is designed to create a leaner, more simplified organization which we expect to enable faster decision making and better position the Company for the ~~three~~future of the energy markets.

We continue to invest in the Baker Hughes portfolio through strategic acquisitions and ~~nine months ended September 30, 2022, respectively.~~early-stage new energy investments. In April 2023, we closed on the acquisition of Altus Intervention, a leading international provider of well intervention services and downhole technology, which will enhance OFSE's existing intervention solutions business

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 24

and add new technology that can be scaled into new geographic markets. Also in April 2023, we closed on the disposition of our Nexus Controls business to GE. GE will continue to provide Baker Hughes with GE’s MarkTM controls products currently in the Nexus Controls portfolio.

Outlook

Our business is exposed to a number of macro factors, which influence our outlook and expectations given the current volatile conditions in the industry. All of our outlook expectations are purely based on the market as we see it today and are subject to changing conditions in the industry.

•OFSE North America ~~onshore~~ activity: weWe expect North ~~America onshore activity~~American spending to ~~level off~~continue to improve in ~~the fourth quarter of 2022~~2023, as compared to ~~the third quarter of 2022. Looking ahead to 2023, we expect growth in North America onshore activity~~2022, should commodity prices remain at current levels.

•OFSE International ~~onshore~~ activity: weWe expect ~~international activity~~spending outside of North America to ~~continue to improve~~experience strong growth in ~~the fourth quarter of 2022 across a broad range of markets~~2023, as compared to ~~the third quarter of~~ 2022, ~~with further growth in 2023~~ should commodity prices remain at current levels.

•Offshore projects: we expect a recovery in offshore activity and the number of subsea tree awards to grow in 2022 as compared to 2021. Looking ahead to 2023, we expect continued recovery offshore as activity in several basins is set to further strengthen.

•IET LNG projects: weWe remain optimistic on the LNG market long-term and view natural gas as a transition and destination fuel. We continue to view the long-term economics of the LNG industry as positive.

We have other businesses in our portfolio that are more correlated with various industrial metrics, including global GDP ~~growth, such as our Digital Solutions segment.~~

growth. We also have businesses within our portfolio that are exposed to new energy solutions, specifically focused around reducing carbon emissions of the energy and broader industry, including hydrogen, geothermal, carbon capture, utilization and storage, and energy storage. We expect to see continued growth in these businesses as new energy solutions become a more prevalent part of the broader energy mix.

Overall, we believe our portfolio is well positioned to compete across the energy value chain and deliver comprehensive solutions for our customers. We remain optimistic about the long-term economics of the oil and gas industry, but we are continuing to operate with flexibility. Over time, we believe the world’s demand for energy will continue to rise, and that hydrocarbons will play a major role in meeting the world's energy needs for the foreseeable future. As such, we remain focused on delivering innovative, low-emission, and cost-effective solutions that deliver step changes in operating and economic performance for our customers.

~~CORPORATE RESPONSIBILITY~~Corporate Responsibility

We believe we have an important role to play in society as an industry leader and partner. We view environmental, social, and governance as a key lever to transform the performance of our Company and our industry. In January 2019, we made a commitment to reduce Scope 1 and 2 carbon dioxide equivalent emissions from our operations by 50% by 2030, achieving net zero emissions by 2050. We continue to make progress on emissions reductions, and reported in our 2021 Corporate Responsibility report a 23% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions compared to our 2019 base year.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 29~~

BUSINESS ENVIRONMENT

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition and liquidity position as of and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ and should be read in conjunction with the condensed consolidated financial statements and related notes of the Company.

Our revenue is predominately generated from the sale of products and services to major, national, and independent oil and natural gas companies worldwide, and is dependent on spending by our customers for oil and natural gas exploration, field development and production. This spending is driven by a number of factors, including our customers' forecasts of future energy demand and supply, their access to resources to develop and produce oil and natural gas, their ability to fund their capital programs, the impact of new government regulations and most importantly, their expectations for oil and natural gas prices as a key driver of their cash flows.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 25

Oil and Natural Gas Prices

Oil and natural gas prices are summarized in the table below as averages of the daily closing prices during each of the periods indicated.
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Brent oil price ($/Bbl) (1)
$ 100.71 $ 73.51 $ 105.00 $ 67.89
WTI oil price ($/Bbl) (2)
93.06 70.58 98.96 65.05
Natural gas price ($/mmBtu) (3)
8.03 4.35 6.74 3.61


	Three Months Ended March 31,
	2023		2022
Brent oil price ($/Bbl) (1)	$	81.14	$	100.87
WTI oil price ($/Bbl) (2)	76.00		95.18
Natural gas price ($/mmBtu) (3)	2.62		4.67

(1)Energy Information Administration (EIA) Europe Brent Spot Price per Barrel

(2)EIA Cushing, OK WTI (West Texas Intermediate) spot price

(3)EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit

Oil and natural gas prices increased during the three and nine months ended September 30, 2022 largely driven by supply constraints which has also been amplified as a result of recent geopolitical events.

Outside North America, customer spending is most heavily influenced by Brent oil prices, which ~~increased~~decreased from the same quarter last year, ranging from a high of ~~$121.80/~~$87.54/Bbl in ~~July 2022~~January 2023 to a low of ~~$82.55/~~$71.03/Bbl in ~~September 2022.~~March 2023. For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, Brent oil prices averaged ~~$105.00/~~$81.14/Bbl, which represented ~~an increase~~a decrease of ~~$37.11/~~$19.73/Bbl from the same period last year.

In North America, customer spending is highly driven by WTI oil prices, which ~~increased~~decreased from the same quarter last year. Overall, WTI oil prices ranged from a high of ~~$110.30/~~$81.62/Bbl in ~~July 2022~~January 2023 to a low of ~~$77.17/~~$66.61/Bbl in ~~September 2022.~~March 2023. For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, WTI oil prices averaged ~~$98.96/~~$76.00/Bbl, which represented ~~an increase~~a decrease of ~~$33.91/~~$19.18/Bbl from the same period last year.

In North America, natural gas prices, as measured by the Henry Hub Natural Gas Spot Price, averaged ~~$8.03/~~$2.62/mmBtu in the ~~third~~first quarter of ~~2022,~~2023, representing a ~~85% increase~~44% decrease from the same quarter in the prior year. Throughout the quarter, Henry Hub Natural Gas Spot Prices ranged from a high of $3.78/mmBtu in January 2023 to a low of ~~$5.65/~~$1.93/mmBtu in ~~July 2022 to a high of $9.85/mmBtu in August 2022.~~March 2023.

Baker Hughes Rig Count

The Baker Hughes rig counts are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. Rig count trends are driven by the exploration and development spending by oil and natural gas companies, which in turn is influenced by current and future price expectations for oil and natural gas. The counts may reflect the relative strength and stability of energy prices and overall market activity; however, these counts should not be solely relied on as other specific and pervasive conditions may exist that affect overall energy prices and market activity.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 30~~

We have been providing rig counts to the public since 1944. We gather all relevant data through our field service personnel, who obtain the necessary data from routine visits to the various rigs, customers, contractors and other outside sources as necessary. We base the classification of a well as either oil or natural gas primarily upon filings made by operators in the relevant jurisdiction. This data is then compiled and distributed to various wire services and trade associations and is published on our website. We believe the counting process and resulting data is reliable; however, it is subject to our ability to obtain accurate and timely information. Rig counts are compiled weekly for the U.S. and Canada and monthly for all international rigs. Published international rig counts do not include rigs drilling in certain locations, such as ~~the Russia Caspian region, and~~ onshore China because this information is not readily available.

Rigs in the U.S. and Canada are counted as active if, on the day the count is taken, the well being drilled has been started but drilling has not been completed and the well is anticipated to be of sufficient depth to be a potential consumer of our drill bits. In international areas, rigs are counted on a weekly basis and deemed active if drilling activities occurred during the majority of the week. The weekly results are then averaged for the month and published accordingly. The rig count does not include rigs that are in transit from one location to another, rigging up, being used in non-drilling activities including production testing, completion and workover, and are not expected to be significant consumers of drill bits.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 26

The rig counts are summarized in the table below as averages for each of the periods indicated.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022	2021	% Change		2022	2021	% Change			2023	2022	% Change
North America	North America	960	647	48	%	876	570	54	%	North America	982	831	18	%
International	International	857	770	11	%	832	735	13	%	International	915	823	11	%
Worldwide	Worldwide	1,817	1,417	28	%	1,708	1,305	31	%	Worldwide	1,897	1,654	15	%

The worldwide rig count was ~~1,817~~1,897 for the ~~third~~first quarter of ~~2022,~~2023, an increase of ~~28%~~15% as compared to the same period last year primarily due to an increase in North America.

Within North America, the increase was primarily driven by the U.S. rig count, which was up ~~53%~~20% when compared to the same period last year, and an increase in the Canada rig count, which was up ~~32%~~11% when compared to the same period last year. Internationally, the rig count increase was driven primarily by an increase in the Europe, Latin America, and Middle East regions of ~~25%~~19%, 13%, and ~~17%, respectively.~~

The worldwide rig count was 1,708 for the nine months ended September 30, 2022, an increase of 31% as compared to the same period last year primarily due to an increase in North America. Within North America, the increase was primarily driven by the U.S. rig count, which was up 58% when compared to the same period last year, and an increase in the Canada rig count, which was up 40% when compared to the same period last year. Internationally, the rig count increase was driven primarily by an increase in the Africa and Latin America regions of 25% and 24%10%, respectively.

RESULTS OF OPERATIONS

The discussions below relating to significant line items from our condensed consolidated statements of income (loss) are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items. In addition, the discussions below for revenue and cost of revenue are on a total basis as the business drivers for product sales and services are similar. All dollar amounts in tabulations in this section are in millions of dollars, unless otherwise stated. Certain columns and rows may not add due to the use of rounded numbers.

Our condensed consolidated ~~statement~~statements of income (loss) displays sales and costs of sales in accordance with SEC regulations under which "goods" is required to include all sales of tangible products and "services" must include all other sales, including other service activities. For the amounts shown below, we distinguish between "equipment" and "product services", where product services refer to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of our operations. We refer to "product services" simply as "services" within the Business Environment section of Management's Discussion and Analysis.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 31~~

Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level. The performance of our operating segments is primarily evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes and before the following: net interest expense, net other non-operating ~~loss,~~income (loss), corporate expenses, restructuring, impairment and other charges, goodwill and inventory impairments, ~~separation-related costs,~~ and certain gains and losses not allocated to the operating segments.

In evaluating the segment performance, the Company primarily uses the following:

Volume: Volume is the increase or decrease in products and/or services sold period-over-period excluding the impact of foreign exchange and price. The volume impact on profit is calculated by multiplying the prior period profit rate by the change in revenue volume between the current and prior period. It also includes price, defined as the change in sales price for a comparable product or service period-over-period and is calculated as the period-over-period change in sales prices of comparable products and services.

Foreign Exchange ("FX"): FX measures the translational foreign exchange impact, or the translation impact of the period-over-period change on sales and costs directly attributable to change in the foreign exchange rate compared to the U.S. dollar. FX impact is calculated by multiplying the functional currency amounts (revenue or profit) with the period-over-period FX rate variance, using the average exchange rate for the respective period.

(Inflation)/Deflation: (Inflation)/deflation is defined as the increase or decrease in direct and indirect costs of the same type for an equal amount of volume. It is calculated as the year-over-year change in cost (i.e. price paid) of direct material, compensation and benefits and overhead costs.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 27

Productivity: Productivity is measured by the remaining variance in profit, after adjusting for the period-over-period impact of volume and price, foreign exchange and (inflation)/deflation as defined above. Improved or lower period-over-period cost productivity is the result of cost efficiencies or inefficiencies, such as cost decreasing or increasing more than volume, or cost increasing or decreasing less than volume, or changes in sales mix among segments. This also includes the period-over-period variance of transactional foreign exchange, aside from those foreign currency devaluations that are reported separately for business evaluation purposes.

Orders and Remaining Performance Obligations

Orders: For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we recognized total orders of ~~$18.8~~$7.6 billion, an increase of ~~$3.7~~$0.8 billion, or ~~25%, from the nine months ended September 30, 2021. For the three months ended September 30, 2022, we recognized orders of $6.1 billion, an increase of $0.7 billion, or 13%~~12%, from the three months ended ~~September 30, 2021.~~March 31, 2022.

For the three months ended March 31, 2023, our OFSE segment recognized orders of $4.1 billion, an increase of $0.8 billion, or 25% and our IET segment recognized orders of $3.5 billion, a decrease of $35 million, or 1% compared to the three months ended March 31, 2022. Within IET, Gas Technology Equipment orders were ~~up $0.5~~$1.9 billion ~~or 20%,~~ and ~~service~~Gas Technology Services orders were ~~up $0.2~~$0.7 billion ~~or 7%. The increase in orders was driven by higher order intake in all segments.~~for the three months ended March 31, 2023.

Remaining Performance Obligations ("RPO"): As of ~~September 30, 2022,~~March 31, 2023, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance ~~obligation~~sobligations was ~~$24.7~~$29.6 billion. As of March 31, 2023, OFSE remaining performance obligations totaled $3.1 billion, and IET remaining performance obligations totaled $26.5 billion.

Revenue and Operating Income ~~(Loss)~~

~~Revenue and operating income (loss)~~Summarized financial information for ~~each of our four operating~~the Company's segments is ~~provided below.~~shown in the following tables.

Three Months Ended September 30, $ Change Nine Months Ended September 30, $ Change
2022 2021 2022 2021
Segment revenue:
Oilfield Services $ 2,842 $ 2,419 $ 423 $ 8,019 $ 6,976 $ 1,043
Oilfield Equipment 561 603 (42) 1,630 1,867 (237)
Turbomachinery & Process Solutions 1,438 1,562 (124) 4,076 4,675 (599)
Digital Solutions 528 510 19 1,526 1,499 27
Total $ 5,369 $ 5,093 $ 276 $ 15,251 $ 15,017 $ 234


	Three Months Ended March 31,				$ Change
	2023		2022
Revenue:
Well Construction	$	1,061	$	883	$	178
Completions, Intervention & Measurements	909		781		128
Production Solutions	938		825		113
Subsea & Surface Pressure Systems	670		528		142
Oilfield Services & Equipment	3,577		3,017		560
Gas Technology - Equipment	827		543		284
Gas Technology - Services	591		581		10
Total Gas Technology	1,418		1,124		294
Condition Monitoring	140		126		14
Inspection	254		212		42
Pumps, Valves & Gears	201		221		(20)
PSI & Controls	125		136		(11)
Total Industrial Technology	721		694		27
Industrial & Energy Technology	2,138		1,818		320
Total	$	5,716	$	4,835	$	881

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 3228

Three Months Ended September 30, $ Change Nine Months Ended September 30, $ Change
2022 2021 2022 2021
Segment operating income (loss):
Oilfield Services $ 330 $ 190 $ 140 $ 812 $ 505 $ 307
Oilfield Equipment (6) 14 (20) (26) 45 (71)
Turbomachinery & Process Solutions 262 278 (16) 705 705 —
Digital Solutions 20 26 (6) 53 75 (22)
Total segment operating income 606 508 98 1,544 1,330 214
Corporate (103) (105) 2 (316) (324) 8
Inventory impairment — — — (31) — (31)
Restructuring, impairment and other (230) (14) (216) (653) (219) (434)
Separation related (5) (11) 6 (23) (53) 30
Operating income 269 378 (109) 522 736 (214)
Other non-operating loss, net (60) (102) 42 (657) (791) 134
Interest expense, net (65) (67) 2 (188) (205) 17
Income (loss) before income taxes 144 209 (65) (323) (260) (63)
Provision for income taxes (145) (189) 44 (422) (422) —
Net income (loss) $ (1) $ 20 $ (21) $ (745) $ (682) $ (63)
The following table presents Oilfield Services & Equipment revenue by geographic region:


	Three Months Ended March 31,				$ Change
	2023		2022
North America	$	992	$	823	$	169
Latin America	661		440		221
Europe/CIS/Sub-Saharan Africa (1)	581		660		(79)
Middle East/Asia	1,345		1,094		251
Oilfield Services & Equipment	$	3,577	$	3,017	$	560

North America	$	992	$	823	$	169
International	2,586		2,194		392

(1)Impacted by the discontinuation of our Russia operations that occurred in 2022.

The following table presents segment operating income through to net income for the Company.


	Three Months Ended March 31,				$ Change
	2023		2022
Segment operating income:
Oilfield Services & Equipment	$	371	$	213	$	158
Industrial & Energy Technology	241		241		—
Total segment operating income	612		453		159
Corporate	(100)		(105)		5

Inventory impairment	(18)		—		(18)
Restructuring, impairment and other	(56)		(70)		14
Operating income	438		279		160
Other non-operating income (loss), net	386		(28)		414
Interest expense, net	(64)		(64)		—
Income before income taxes	760		187		573

Provision for income taxes	(141)		(95)		(46)
Net income	$	619	$	92	$	527

Segment Revenues and Segment Operating Income ~~(Loss)~~

~~Third~~First Quarter of ~~2022~~2023 Compared to the ~~Third~~First Quarter of ~~2021~~2022

Revenue increased ~~$276~~$881 million, or 5%18%, driven by ~~higher volume~~increased activity in ~~OFS~~OFSE and ~~DS, partially offset by lower volume in TPS and OFE. OFS~~IET. OFSE increased ~~$423~~$560 million and DSIET increased ~~$19 million, partially offset by TPS which decreased $124 million and OFE which decreased $42~~$320 million.

Total segment operating income increased ~~$98 million. The increase was~~$159 million, driven by ~~OFS which increased $140 million, partially offset by OFE which decreased $20 million, TPS which decreased $16 million, and DS which decreased $6 million.~~OFSE.

Oilfield Services & Equipment

~~OFS~~OFSE revenue of ~~$2,842~~$3,577 million increased ~~$423~~$560 million, or ~~17%~~19%, in the ~~third~~first quarter of 2023 compared to the first quarter of 2022, ~~compared to the third quarter of 2021,~~ as a result of increased activity in North America and internationally, as evidenced by an increase in the global rig count. North America revenue was ~~$942 milli~~on$992 million in the ~~third~~first quarter of 2023, an increase of $169 million from the first quarter of 2022. International revenue was $2,586 million in the first quarter of 2023, an increase of $392 million from the first quarter of 2022, ~~an increase of $229~~ ~~million from the third quarter of 2021. International revenue was $1,899 million~~ ~~in the third quarter of 2022, an increase~~ ~~of $194~~ ~~million from the third quarter of 2021,~~ driven by the ~~Middle East,~~ Latin America ~~Sub-Sahara Africa~~ and Middle East/Asia ~~Pacific~~ regions, partially offset by declines in the Europe/CIS/Sub-Saharan Africa region, driven by lower Russia ~~Caspian and Europe regions.~~volume.

~~OFS~~OFSE segment operating income was ~~$330~~$371 million in the ~~third~~first quarter of ~~2022~~2023 compared to ~~$190~~$213 million in the ~~third~~first quarter of ~~2021.~~2022. The increase in operating income was primarily driven by higher volume and price, partially offset by ~~logistics~~cost inflation and ~~commodity~~unfavorable cost ~~inflation.~~

~~Oilfield Equipment~~

OFE revenue of $561 million decreased $42 million, or 7%, in the third quarter of 2022 compared to the third quarter of 2021. The decrease was primarily driven by lower volume in the subsea production systems and from the removal of subsea drilling systems business from the consolidated OFE operations in the fourth quarter of 2021 due to the formation of a joint venture, partially offset by higher volume in the flexible pipe, services and surface pressure control projects businesses.productivity.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 3329

Industrial & Energy Technology

~~OFE segment operating loss was $6~~IET revenue of $2,138 million increased $320 million, or 18%, in the ~~third~~first quarter of ~~2022~~2023 compared to ~~segment operating income of $14 million in~~ the ~~third~~first quarter of ~~2021.~~ 2022. The ~~decrease in income~~increase was primarily driven by ~~lower~~higher volume ~~inflationary pressure,~~in Gas Technology Equipment and, ~~decreased cost productivity.~~

~~Turbomachinery & Process Solutions~~

~~TPS revenue of $1,438 million decreased $124 million, or 8%,~~to a lesser extent, in ~~the third quarter of 2022 compared to the third quarter of 2021. The decrease was primarily driven~~Gas Technology Services and Industrial Technology, partially offset by ~~lower equipment and projects revenue, and~~unfavorable foreign currency translation impact. When compared to the prior year, equipment revenue was down 17%, and service revenue was flat. Equipment revenue in the quarter represented 41% and service revenue represented 59% of total segment revenue.

~~TPS~~IET segment operating income was ~~$262~~$241 million in the ~~third~~first quarter of ~~2022 compared to $278 million in the third quarter of 2021. The decrease in income was primarily driven by lower volume and cost inflation, partially offset by favorable business mix.~~

~~Digital Solutions~~

~~DS revenue of $528 million increased $19 million, or 4%, in the third quarter of 2022~~2023, flat when compared to the ~~third~~first quarter of ~~2021,~~2022. The operating income performance in the first quarter of 2023 was driven by higher volume ~~across all businesses.~~

~~DS segment operating income was $20 million~~and pricing actions in ~~the third quarter of 2022 compared to $26 million in the third quarter of 2021. The decrease in profitability was primarily driven~~certain product lines, offset by ~~lower cost productivity and~~ inflationary pressure, ~~as we continue~~unfavorable business mix, higher research and development costs related to ~~work through electronics shortages, partially offset by increased volume.~~new energy investments, and unfavorable foreign currency translation impact.

Corporate

In the ~~third~~first quarter of ~~2022,~~2023, corporate expenses were $~~103~~100 million compared to $105 million in the ~~third~~first quarter of ~~2021.~~2022. The decrease of $2$5 million was ~~primarily~~ driven by cost ~~efficiencies and past restructuring actions.~~efficiencies.

Inventory Impairment

In the first quarter of 2023, we recorded inventory impairments of $18 million, predominately in our OFSE segment. Charges for inventory impairments are reported in the "Cost of goods sold" caption in the condensed consolidated statements of income (loss).

Restructuring, Impairment and Other

In the ~~third~~first quarter of ~~2022,~~2023, we recognized ~~$230~~$56 million of restructuring, impairment, and other charges, compared to ~~$14~~$70 million in the ~~third~~first quarter of ~~2021. The charges in~~2022. In the third quarter of 2022, ~~relate~~we announced a restructuring plan in conjunction with a change in our operating segments. As a result, we continued to incur charges in the first quarter of 2023 primarily related to employee termination expenses ~~and PP&E impairments~~ driven by actions taken ~~by the Company~~ to facilitate ~~its~~the reorganization into two ~~segments, as well as global footprint optimization projects in certain OFS and OFE businesses.~~segments. In addition, ~~we impaired certain long-lived assets in OFE for the SPS business due~~costs were incurred related to ~~a decrease in the estimated future cash flows driven bya decline~~exit activities at specific locations in our ~~long-term~~segments to align with our current market outlook ~~for this business.~~and to rationalize our manufacturing supply chain footprint. The charges in the ~~third~~first quarter of ~~2021~~2022 primarily related to ~~initiatives in~~ our ~~OFS~~IET segment ~~that were~~for a write-off of an equity method investment and the ~~continuation~~release of ~~our overall strategy to right-size our structural costs~~foreign currency translation adjustments for ~~this segment.~~certain restructured product lines.

Other Non-Operating ~~Loss,~~Income (loss), Net

In the ~~third~~first quarter of ~~2022,~~2023, we incurred ~~$60~~$386 million of other non-operating ~~losses.~~income. Included in this amount was a ~~loss~~gain of ~~$52~~$392 million from the change in fair value ~~in our C3 AI and ADNOC~~for certain equity investments. For the ~~third~~first quarter of ~~2021,~~2022, we incurred ~~$102~~$28 million of other non-operating losses. Included in this amount was a ~~loss~~gain of ~~$140~~$11 million from the change in fair value ~~in our C3 AI investment.~~for certain equity investments.

Interest Expense, Net

In the ~~third~~first quarter of ~~2022,~~2023, we incurred interest expense, net of interest income, of ~~$65~~$64 million, which ~~decreased $2 million~~was flat compared to the ~~third~~first quarter of ~~2021. The reduction was primarily driven by higher interest income.~~2022.

Income Taxes

In the ~~third~~first quarter of ~~2022,~~2023, the provision for income taxes was ~~$145~~$141 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to ~~losses with no~~income subject to U.S. tax ~~benefit~~at an effective rate less than 21% due to valuation

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 34~~

allowances, ~~restructuring charges for~~ which ~~a majority has no tax benefit, and earnings~~is partially offset by income in jurisdictions with tax rates higher than in the U.S. In addition, since we are a partnership for U.S. federal tax purposes, any tax ~~benefits~~impacts associated with U.S. income or losses are recognized by our Members and not reflected in our tax expense.

In the ~~third~~first quarter of ~~2021,~~2022, the provision for income taxes was ~~$189~~$95 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances and ~~changes in unrecognized tax benefits related to uncertain tax positions.~~

~~The First Nine Months of 2022 Compared to the First Nine Months of 2021~~

Revenue increased $234 million, primarily driven by higher volume in OFS and, to a lesser extent, DS, partially offset by lower volume in TPS and OFE. OFS increased $1,043 million and DS increased $27 million, partially offset by TPS which decreased $599 million and OFE which decreased $237 million.

~~Total segment operating~~ income ~~increased $214 million. The increase was driven by OFS which increased $307 million, partially offset by OFE which decreased $71 million and DS which decreased $22 million.~~

~~Oilfield Services~~

OFS revenue of $8,019 million increased $1,043 million, or 15%, in the first nine months of 2022 compared to the first nine months of 2021, as a result of increased activity in North America and internationally, as evidenced by an increase in the global rig count. North America reve~~nue was~~ ~~$2,585 million~~ ~~in the~~ ~~first nine months of 2022, an~~ ~~increase of $554~~ ~~million from the~~ ~~first nine months of 2021. International revenue was~~ ~~$5,434~~ ~~million in the~~ ~~first nine months of 2022, an increase of~~ ~~$489~~ ~~million from the~~ ~~first nine months of 2021, driven by the Middle East, Latin America, Sub-Sahara Africa, and Asia Pacific regions, partially offset by declines in the Russia Caspian and Europe regions.~~

~~OFS segment operating income was $812 million in the~~ ~~first nine months of 2022~~ ~~compared to $505 million in the~~ ~~first nine months of 2021.~~ ~~The increase in income was primarily driven by higher volume and price, partially offset by logistics and commodity cost inflation.~~

~~Oilfield Equipment~~

~~OFE revenue of~~ ~~$1,630 million~~ ~~decreased $237 million, or 13%, in the first nine months of 2022 compared to the first nine months of 2021.~~ The decrease was primarily driven by lower volume in the subsea production systems and surface pressure control projects businesses, and from the removal of subsea drilling systems business from the consolidated OFE operations in the fourth quarter of 2021 due to the formation of a joint venture, partially offset by higher volume in the services and flexible pipe businesses.

~~OFE segment operating loss was~~ ~~$26 million~~ ~~in the first nine months of 2022 compared to segment operating income of~~ ~~$45 million~~ ~~in the first nine months of 2021.~~ ~~The decrease in income was primarily driven by lower volume, cost inflation, and decreased cost productivity.~~

~~Turbomachinery & Process Solutions~~

~~TPS revenue of $4,076 million decreased $599 million, or 13%, in the~~ ~~first nine months of 2022~~ ~~compared to the~~ ~~first nine months of 2021~~. ~~The decrease was primarily driven by lower equipment and projects revenue, partially offset by higher volume in industrial valves, pumps and gears. Equipment revenue w~~as down 25% and service revenue was down 2% when compared to the prior year. Equipment revenue in the first nine months of 2022 represented 41% and service revenue represented 59% of total segment revenue.

~~TPS segment operating income was $705 million for the~~ ~~first nine months of 2022~~ ~~and~~ ~~2021. The income performance in 2022 was driven by favorable business mix and increased cost productivity, offset by lower volume, unfavorable foreign currency translation impact, and inflationary pressure.~~

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 35~~

~~Digital Solutions~~

~~DS revenue of~~ ~~$1,526 million~~ increased $27 million, or 2%, in the first nine months of 2022 compared to the first nine months of 2021, mainly driven by volume increases in Precision Sensors and Instrumentation, Waygate Technologies, and Process & Pipeline Services, partially offset by declines in the Bently Nevada and Nexus Controls businesses.

~~DS segment operating income was $53 million in the~~ ~~first nine months of 2022~~ ~~compared to $75 million in the~~ ~~first nine months of 2021~~. The decrease in profitability was primarily driven by lower cost productivity and inflationary pressure, as the segment continues to work through electronic shortages, partially offset by higher volume.

~~Corporate~~

~~In the first nine months of 2022, corporate expenses were $316 million compared to $324 million in the first nine months of 2021. The decrease of $8 million was primarily driven by cost efficiencies and past restructuring actions.~~

~~Restructuring, Impairment and Other~~

In the first nine months of 2022, we recognized $653 million of restructuring, impairment and other charges, primarily related to the suspension of substantially all of our operations in Russia in the second quarter of 2022 as well as charges for employee terminations and PP&E impairments driven by actions taken by the Company to facilitate its reorganization into two segments, and global footprint optimization projects in certain OFS and OFE businesses. In addition, we impaired certain long-lived assets in our OFE segment for the SPS business due to a decrease in the estimated future cash flows driven bya decline in our long-term market outlook for this business. In the first nine months of 2021, we recognized $219 million in restructuring, impairment and other charges, primarily related to initiatives in our OFS segment that were the continuation of our overall strategy to right-size our structural costs in this segment.

~~Other Non-Operating Loss, Net~~

~~In the first nine months of 2022, we incurred $657 million of other non-operating losses. Included in this amount was~~ ~~a loss of~~ ~~$426 million~~ ~~related to the OFS business in Russia, which was classified as held for sale in the second quarter, and a loss~~ ~~of $164 million~~ ~~related to marking our investments in C3 AI and ADNOC to fair value.~~ ~~For the first nine months of 2021, we incurred $791 million of other non-operating losses. Included in this amount were net losses of $955 million~~ ~~related to marking our investment in C3 AI to fair value, partially offset by the reversal of current accruals of $121 million due to the settlement of certain legal matters.~~

~~Interest Expense, Net~~

In the first nine months of 2022, we incurred interest expense, net of interest income, of $188 million, which decreased $17 million compared to the first nine months of 2021, primarily driven by higher interest income.

~~Income Taxes~~

In the first nine months of 2022, the provision for income taxes was $422 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances, restructuring charges for which a majority has no tax benefit, and earnings in jurisdictions with tax rates higher than the U.S.

In the first nine months of 2021, the provision for income taxes was $422 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances and changes in unrecognized, partially offset by tax benefits related to uncertain tax positions.

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 30

LIQUIDITY AND CAPITAL RESOURCES

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility in order to fund the requirements of our business. We continue to maintain solid financial strength

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 36~~

and liquidity. At ~~September 30, 2022,~~March 31, 2023, we had cash and cash equivalents of ~~$2.8~~$2.4 billion compared to ~~$3.8~~$2.5 billion at December 31, ~~2021.~~2022.

In the U.S. we held cash and cash equivalents of approximately ~~$0.8~~$0.7 billion and ~~$1.6~~$0.6 billion and outside the U.S. of approximately ~~$2.1~~$1.7 billion and ~~$2.2~~$1.9 billion as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. A substantial portion of the cash held outside the U.S. at ~~September 30, 2022~~March 31, 2023 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate those funds to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

We have a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial banks maturing in December 2024. The Credit Agreement contains certain customary representations and warranties, certain customary affirmative covenants and certain customary negative covenants. 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. In addition, we have a commercial paper program with authorization up to $3 billion under which we may issue from time to time commercial paper with maturities of no more than 397 days. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there were no borrowings under either the Credit Agreement or the commercial paper program.

Certain Senior Notes contain covenants that restrict our ability to take certain actions. See "Note ~~9. Borrowings"~~8. Debt" of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report for further details. At ~~September 30, 2022,~~March 31, 2023, we were in compliance with all debt covenants. Our next debt maturity is December 2023.

We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the uncertainty created by geopolitical events, a global pandemic or a significant decline in oil and gas prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be negatively impacted. Additionally, it could cause the rating agencies to lower our credit ratings. There are no ratings triggers that would accelerate the maturity of any borrowings under our committed credit facility; however, a downgrade in our credit ratings could increase the cost of borrowings under the credit facility and could also limit or preclude our ability to issue commercial paper. Should this occur, we could seek alternative sources of funding, including borrowing under the credit facility.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we dispersed cash to fund a variety of activities including certain working capital needs, capital expenditures, and distributions to ~~Members, and repurchases of our Units.~~Members.

Cash Flows

Cash flows provided by (used in) each type of activity were as follows for the ~~nine~~three months ended ~~September 30:~~March 31:


(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Operating activities	Operating activities	$	997	$	1,598	Operating activities	$	462	$	78
Investing activities	Investing activities	(580)		(212)		Investing activities	(229)		(266)
Financing activities	Financing activities	(1,297)		(1,585)		Financing activities	(250)		(469)

Operating Activities

Cash flows from operating activities generated cash of $462 million and $78 million for the three months ended March 31, 2023 and 2022, respectively.

Our largest source of operating cash is payments from customers, of which the largest component is collecting cash related to our sales of products and services including advance payments or progress collections for work to be performed. The primary use of operating cash is to pay our suppliers, employees, tax authorities, and others for a wide range of goods and services.

~~Cash flows~~

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 31

For the three months ended March 31, 2023, cash generated from operating activities ~~generated~~were primarily driven by net income adjusted for certain noncash items (including depreciation, amortization, gain on equity securities, stock-based compensation cost, deferred tax provision, and the impairment of certain assets). Net working capital cash ~~of $997 million and $1,598~~usage was $132 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023, mainly due to the increase in receivables, and ~~2021, respectively.~~inventory as we continue to build for revenue growth, partially offset by strong progress collections on equipment contracts.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022, cash generated from operating activities were primarily driven by net income adjusted for certain noncash items (including depreciation, amortization, ~~loss on assets held for sale, loss~~gain on equity securities, stock-based compensation costs, and ~~the impairment of certain assets)~~deferred tax provision). Net working capital cash usage was ~~$261~~$153 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022, mainly due to the increase in receivables, driven primarily by lower collections, and inventory as we ~~build~~built for revenue growth, partially offset by strong progress collections on equipment contracts.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 37~~

For the nine months ended September 30, 2021, cash generated from operating activities were primarily driven by net losses adjusted for certain noncash items (including depreciation, amortization, and loss on equity securities) and working capital, which includes contract and other deferred assets. Net working capital generation was $481 million for the nine months ended September 30, 2021, mainly due to receivables, inventory, and contract assets, partially offset by progress collections, as we continued to improve our working capital processes.

Investing Activities

Cash flows from investing activities used cash of ~~$580~~$229 million and ~~$212~~$266 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Our principal recurring investing activity is the funding of capital expenditures including property, plant and equipment and software, to support and generate revenue from operations. Expenditures for capital assets were ~~$720~~$310 million and ~~$590~~$268 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively. Proceeds~~respectively, partially offset by cash flows from the sale of property, plant and equipment ~~were $189~~("PP&E") of $46 million and ~~$178~~$91 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, respectively. Proceeds from the disposal of assets are primarily related to equipment that was lost-in-hole, predominantly in OFSE, and ~~2021, respectively.~~

~~There were~~to PP&E no ~~C3 AI Shares~~longer used in operations that was sold ~~during~~throughout the nine months ended September 30, 2022. During the nine months ended September 30, 2021, we sold approximately 2.2 million of C3 AI Shares and received proceeds of $145 million, which is included in other investing activities.period.

Financing Activities

Cash flows from financing activities used cash of ~~$1,297~~$250 million and ~~$1,585~~$469 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

We had net repayments of debt and other borrowings of $22 million and $60 million for the nine months ended September 30, 2022 and 2021, respectively. In April 2021, we repaid $832 million (£600 million) of commercial paper originally issued in May 2020 under the COVID Corporate Financing Facility established by the Bank of England.

We made distributions to our Members of ~~$552~~$192 million and ~~$563~~$185 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

~~In 2021, Baker Hughes' Board of Directors authorized us to repurchase up to $2 billion of our Units. For~~There were no Units repurchased during the ~~nine~~three months ended ~~September 30,~~March 31, 2023. During the three months ended March 31, 2022, we repurchased and canceled ~~25.5~~8.1 million Units for a total of ~~$727~~$236 million. ~~For the nine months ended September 30, 2021,~~As of March 31, 2023, we ~~repurchased and canceled 4.4 million Units for a total~~had authorization remaining to repurchase up to approximately $2.8 billion of ~~$106 million.~~our Units.

Cash Requirements

We believe cash on hand, cash flows from operating activities, the available revolving credit facility, access to both our commercial paper program or our uncommitted lines of credit, and availability under our existing shelf registrations of debt will provide us with sufficient capital resources and liquidity in the short-term and long-term to manage our working capital needs, meet contractual obligations, fund capital expenditures and distributions, repay debt, repurchase our common units, and support the development of our short-term and long-term operating strategies. When necessary, we issue commercial paper or other short-term debt to fund cash needs in the U.S. in excess of the cash generated in the U.S.

Our capital expenditures can be adjusted and managed by us to match market demand and activity levels. We continue to believe that based on current market conditions, capital expenditures in ~~2022~~2023 are expected to be made at a rate that would equal up to 5% of annual revenue. The expenditures are expected to be used primarily for normal, recurring items necessary to support our business. We currently anticipate making income tax payments in the range of ~~$525~~$500 million to ~~$625~~$550 million in ~~2022.~~2023.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 3832

Other Factors Affecting Liquidity

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk through working with our customers to restructure their debts. A customer's failure or delay in payment could have a material adverse effect on our short-term liquidity and results of operations. Our gross customer receivables in the U.S. were ~~14%~~16% and in Mexico 13% as of ~~September 30, 2022. In Mexico, our gross customer receivables were 11% as of September 30, 2022.~~March 31, 2023. No other country accounted for more than 10% of our gross customer receivables at this date.

International operations: Our cash that is held outside the U.S. is ~~72%~~73% of the total cash balance as of ~~September 30, 2022.~~March 31, 2023. We may not be able to use this cash quickly and efficiently due to exchange or cash controls that could make it challenging. As a result, our cash balance may not represent our ability to quickly and efficiently use this cash.

~~Supply chain finance programs:~~ Under supply chain finance programs, administered by a third party, our suppliers are given the opportunity to sell receivables from us to participating financial institutions at their sole discretion at a rate that leverages our credit rating and thus might be more beneficial to our suppliers. Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program. These liabilities continue to be presented as accounts payable in our condensed consolidated statements of financial position and reflected as cash flow from operating activities when settled. We do not believe that changes in the availability of supply chain financing programs would have a material impact on our liquidity.

CRITICAL ACCOUNTING ESTIMATES

Our critical accounting estimation processes are consistent with those described in Item 7 of Part II, "Management's discussion and analysis of financial condition and results of operations" of our ~~2021~~2022 Annual Report.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement"). All statements, other than historical facts, including statements regarding the presentation of the Company's operations in future reports and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words "may," "will," "should," "potential," "intend," "expect," "would," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "predict," "continue," "target", "goal" or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, the risk factors identified in the "Risk Factors" section of Part II of Item 1A of this report and Part 1 of Item 1A of our ~~2021~~2022 Annual Report and those set forth from time-to-time in other filings by the Company with the SEC. These documents are available through our website or through the SEC's Electronic Data Gathering and Analysis Retrieval (EDGAR) system at http://www.sec.gov.

Any forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

~~Baker Hughes Holdings LLC 2022 Third Quarter Form 10-Q | 39~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk affecting us, see Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” in our ~~2021~~2022 Annual Report. Our exposure to market risk has not changed materially since December 31, ~~2021.~~2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation,

Baker Hughes Holdings LLC 2023 First Quarter Form 10-Q | 33

the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Exchange Act) were effective at a reasonable assurance level.

There has been no change in our internal controls over financial reporting during the quarter ended ~~September 30, 2022~~March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 4034

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See discussion of legal proceedings in "Note 15. Commitments ~~And~~and Contingencies" of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report, Item 3 of Part I of our ~~2021~~2022 Annual Report and Note 17 of the Notes to Consolidated Financial Statements included in Item 8 of our ~~2021~~2022 Annual Report.

ITEM 1A. RISK FACTORS

As of the date of this filing, the Company and its operations continue to be subject to the risk factors previously discussed in the "Risk Factors" sections contained in the ~~2021~~2022 Annual ~~Report and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.~~Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

We have no mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K to report for the current quarter.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Each exhibit identified below is filed as a part of this report. Exhibits designated with an "*" are filed as an exhibit to this Quarterly Report on Form 10-Q and Exhibits designated with an "**" are furnished as an exhibit to this Quarterly Report on Form 10-Q. Exhibits designated with a "+" are identified as management contracts or compensatory plans or arrangements. Exhibits previously filed are incorporated by reference.




10.5						TMA Master Settlement Agreement as of February 13, 2023 among General Electric Company, Baker Hughes Company, EHHC Newco, LLC and Baker Hughes Holdings LLC to settle disputes under the Tax Matters Agreement.
31.1**						Certification of Lorenzo Simonelli, President and Chief Executive Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2**						Certification of ~~Brian Worrell,~~Nancy Buese, Chief Financial Officer, furnished pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32**						Certification of Lorenzo Simonelli, President and Chief Executive Officer, and ~~Brian Worrell,~~Nancy Buese, Chief Financial Officer, furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended.

101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						XBRL Schema Document
101.CAL*						XBRL Calculation Linkbase Document
101.DEF*						XBRL Definition Linkbase Document
101.LAB*						XBRL Label Linkbase Document
101.PRE*						XBRL Presentation Linkbase Document
104*						Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 4135

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Baker Hughes Holdings LLC (Registrant)

Date:	~~October 20, 2022~~April 19, 2023	By:	/s/ ~~BRIAN WORRELL~~NANCY BUESE
		~~Brian Worrell~~Nancy Buese
		Chief Financial Officer

Date:	~~October 20, 2022~~April 19, 2023	By:	/s/ KURT CAMILLERI
		Kurt Camilleri
		Senior Vice President, Controller and Chief Accounting Officer

Baker Hughes Holdings LLC ~~2022 Third~~2023 First Quarter Form 10-Q | 4236


Derivatives not designated as hedging instruments	Condensed consolidated statement of income caption	Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Currency exchange contracts (1)	Cost of goods sold	$	6	$	(2)	$	(4)	$	7
Currency exchange contracts	Cost of services sold	22		8		36		—
Commodity derivatives	Cost of goods sold	(10)		—		(7)		5
Other derivatives	Other non-operating loss, net	—		—		2		—
Total (2)		$	18	$	6	$	27	$	12


	Three Months Ended September 30,				Nine Months Ended September 30,
Segment revenue	2022		2021		2022		2021
Oilfield Services	$	2,842	$	2,419	$	8,019	$	6,976
Oilfield Equipment	561		603		1,630		1,867
Turbomachinery & Process Solutions	1,438		1,562		4,076		4,675
Digital Solutions	528		510		1,526		1,499
Total	$	5,369	$	5,093	$	15,251	$	15,017


	Three Months Ended September 30,				Nine Months Ended September 30,
Segment income (loss) before income taxes	2022		2021		2022		2021
Oilfield Services	$	330	$	190	$	812	$	505
Oilfield Equipment	(6)		14		(26)		45
Turbomachinery & Process Solutions	262		278		705		705
Digital Solutions	20		26		53		75
Total segment	606		508		1,544		1,330
Corporate	(103)		(105)		(316)		(324)

Inventory impairment (1)	—		—		(31)		—
Restructuring, impairment and other	(230)		(14)		(653)		(219)
Separation related	(5)		(11)		(23)		(53)
Other non-operating loss, net	(60)		(102)		(657)		(791)
Interest expense, net	(65)		(67)		(188)		(205)
Income (loss) before income taxes	$	144	$	209	$	(323)	$	(260)


	Three Months Ended September 30,				Nine Months Ended September 30,
Segment depreciation and amortization	2022		2021		2022		2021
Oilfield Services	$	185	$	183	$	587	$	578
Oilfield Equipment	20		22		60		81
Turbomachinery & Process Solutions	28		30		87		90
Digital Solutions	16		22		57		66
Total segment	249		257		791		815
Corporate	5		5		15		17
Total	$	254	$	262	$	806	$	832


Assets and liabilities of business held for sale	OFS Russia		DS Nexus Controls		Total
Assets
Current receivables	$	57	$	49	$	106

Inventories	76		36		112
Property, plant and equipment	161		3		164
Goodwill	161		231		392
Other assets	18		8		26
Loss on net assets of business held for sale	(426)		—		(426)
Total assets of business held for sale	47		327		374

Liabilities

Accounts payable	42		33		75
All other current liabilities	4		56		60
Other liabilities	1		8		9
Total liabilities of business held for sale	47		97		144
Total net assets of business held for sale	$	—	$	230	$	230