Good day, ladies and gentlemen, and welcome to Baker Hughes Company's Third Quarter 2022 Earnings Call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Jud Bailey, Vice President of Investor Relations. Sir, you may begin.

Thank you. Good morning, everyone and welcome to the Baker Hughes third quarter 2022 earnings conference call. Here with me are our Chairman and CEO, Lorenzo Simonelli; and our CFO, Brian Worrell. The earnings release we issued earlier today can be found on our website at bakerhughes.com. As a reminder, during the course of this conference call, we will provide forward-looking statements. These statements are not guarantees of future performance and involve a number of risks and assumptions. Please review our SEC filings and website for a discussion of the factors that could cause actual results to differ materially. As you know, reconciliations of operating income and other GAAP to non-GAAP measures can be found in our earnings release. With that, I will turn the call over to Lorenzo.

Thank you, Jud. Good morning, everyone and thanks for joining us. We were generally pleased with our third quarter results with strong performance in OFS, while TPS successfully managed multiple challenges. We also saw strong orders performance with continued momentum in OFE as well as TPS. As I mentioned during our second quarter earnings call, the macro outlook has grown increasingly uncertain. The global economy is dealing with the strongest inflationary pressures since the 1970s, a rising interest rate environment and sizable fluctuations in global currencies. Despite these economic challenges, we remain constructive on the outlook for oil and gas and believe that underlying fundamentals remain supportive of a multiyear upturn in global upstream spending. Operators around the world have shown a great deal of financial discipline, which we expect to translate into a more durable upstream spending cycle even in the face of an unpredictable commodity price environment. In 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. This should support price levels that are conducive to driving double-digit upstream spending growth in 2023. 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 cargoes from other regions and created an exceptionally 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. We believe that significant investment is still required over the next 5 to 10 years to ensure natural gas’ position as a key part of the energy transition. However, while 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. As a result, we believe the landscape may be shifting in favor of established LNG players with the scale, diversity and financial strength to navigate the risks and uncertainties. Those with brownfield projects and projects that utilize faster-to-market modular lines may be particularly advantaged in the coming years. On the new energy front, recent policy movements in Europe and the United States are likely to help support a significant increase in clean energy development. In the U.S., the Inflation Reduction Act should be particularly impactful in accelerating the development of green hydrogen, CCUS and direct air capture. While we have not changed our expectations for the ultimate addressable market sizes in these areas, the attractive tax incentives could accelerate development ahead of previously expected forecasts. We also believe that the bill will create favorable economic conditions for our portfolio of new energy investments. Given the dynamic macro backdrop, Baker Hughes is focused on preparing for a range of scenarios and executing on what is within our control. Last month, we announced the restructuring and resegmentation of the company into two reporting segments: OFSE and IET. This resegmentation will simplify and streamline our organizational structure with at least $150 million of cost out and a 25% reduction in the executive management team. These changes will sharpen our focus, improve operational execution, and better position Baker Hughes to capitalize on the quickly changing energy markets. This new structure will elevate new leadership while also creating better flexibility and economies of scale across the two business segments. Importantly, we expect these changes to increase shareholder value and improve the long-term optionality and growth opportunities for Baker Hughes as our markets and customers continue to evolve. In parallel, we continue to invest in Baker Hughes' portfolio through early-stage new energy investments and tuck-in M&A. In addition to the investments in early-stage technologies like Mosaic, NET Power, and HIF Global earlier this year, we announced several strategic acquisitions in the third quarter that will complement our current portfolio and enhance our strategic position. Perhaps the most notable is the recent acquisition of the Power Generation division of BRUSH Group, which positions us well to participate more directly in electrification. Other transactions also include the acquisitions of Quest Integrity and Access ESP, which enhance our inspection capabilities and broaden our ESP technology portfolio. Now I will give you an update on each of our segments. In Oilfield Services, we remain optimistic on the outlook for the sector with growth trends now clearly shifting more in favor of the international markets. The team continues to execute well as they capture net pricing increases and supply chain pressures gradually moderate. Internationally, growth continues to be led by Latin America, West Africa, and the Middle East. In all of these markets, offshore activity is noticeably strengthening, while our drilling services and completions business are well positioned to win. In Latin America, Brazil offers the best combination of visibility and growth in the region, while Mexico and Guyana are also improving. Similarly, in West Africa, we are seeing offshore projects move forward in multiple countries in the region. In the Middle East, Saudi Arabia and UAE are exhibiting the best near-term growth that is expected to continue into 2023 and beyond. Looking ahead, we expect continued growth through the end of this year and double-digit international growth in 2023. In North America, pricing across our portfolio remains firm while drilling and completion activity is beginning to level off after significant growth over the last two years. Although the U.S. market will be more dynamic and dependent on oil prices, we generally expect solid activity levels through the end of this year with an opportunity for modest growth in 2023 driven by public operators. Operationally, our OFS business is executing well and remains on track to achieve our target of 20% EBITDA in the fourth quarter of 2022. Over the course of the year, we have generated solid margin improvement across multiple product lines, including drilling services, completions, artificial lift, and wireline. Importantly, a key driver of margin enhancement has been the continued improvement in our production chemicals business. After several difficult quarters impacted by supply chain and inflation, chemicals have now generated sequential margin rate improvement for two consecutive quarters. Although margin rates are not yet back to prior levels, we have a line of sight to further increases and expect to be at more normalized levels in 2023. In the TPS segment, the third quarter represented another solid performance in orders. We remain on track to generate $8 billion to $9 billion in orders in 2022 and in 2023. Operationally, TPS navigated several challenges and delivered solid results despite further pressure on the euro and continued market pressure on TPS services. The primary growth driver for TPS continues to be LNG, where multiple projects are expected to move forward for FID in 2022 and 2023. Although inflationary pressures and rising interest costs have slowed progress on some projects, we remain comfortable with our expectation of 100 to 150 MTPA reaching FID by the end of 2023, including the 31 MTPA that has reached FID year-to-date. During the quarter, we were pleased to be awarded another order by New Fortress Energy to support their Fast LNG facilities project. NFE will deploy Baker Hughes’ technology for various offshore projects across the globe. This represents the third order we have booked with New Fortress since the second quarter of 2021 and we have now received 7 MTPA of Fast LNG orders. Additionally, we were awarded an order to deliver power generation equipment for a major LNG project in North America. During the quarter, we were also pleased to announce a new service contract for the maintenance and monitoring of turbomachinery equipment operations at ENI-led Coral FLNG, which is the first deepwater floating LNG facility operating off the coast of Mozambique. This new service agreement builds on an existing Coral FLNG contract awarded to Baker Hughes in 2017. As part of the scope, Baker Hughes will fully leverage its growing digital capabilities by providing remote monitoring and diagnostic services, as well as a suite of other services based on Bently Nevada’s System 1 technology. Outside of LNG, TPS received an additional award to supply 12 electric motor-driven compressors to support gas processing for Saudi Aramco’s Jafurah unconventional gas project. This order follows a similar award last quarter, bringing the total to 26 compressor trains supplied to the Jafurah project. We also continued to grow our collaboration with Air Products, securing contracts to supply advanced high-pressure ratio compressor technology for the net-zero hydrogen energy complex in Edmonton, Alberta, and a steam turbine generator for the green ammonia process at the NEOM Green Hydrogen project in Saudi Arabia. With these awards from Air Products, our new energy orders so far this year total over $170 million. We still expect new energy orders for 2022 to be around $200 million. Next, on Oilfield Equipment, growth in the subsea and offshore markets continues to trend positively and should maintain solid order momentum over the next couple of years. OFE saw another record orders quarter in the Flexibles business with over $1 billion in orders year-to-date. The Flexible team continued winning in Brazil as well as in China, retaining incumbency with key customers. Despite these positive order trends, we remain disappointed with the underlying profitability for OFE. As we highlighted in our Strategy Update last month, we have announced several actions to rectify these issues, including an initial $60 million in cost savings from removing management layers and integrating multiple functions and capabilities with OFS. Beyond the cost-out program, we expect to drive further margin improvement by right-sizing OFE’s facilities footprint, addressing supply chain deficiencies and leveraging the shared engineering resources across the broader OFSE organization. As a part of this process, we are well into the wholesale reassessment of the subsea equipment business, which will drive out costs and determine the appropriate size and scale for this business. We have already identified multiple facility rationalization opportunities and feel increasingly confident about our ability to improve profitability in this business. We expect to provide an update on the strategic review of SPS in the first half of 2023. Finally, in Digital Solutions, order activity remained resilient in the third quarter, but the operating environment continues to be challenged by the ongoing disruption to supply chains for chips and electrical components. During the quarter, Bently Nevada secured a multiyear SaaS agreement expanding its existing scope to deliver plant-wide software across our customer’s entire installed base in Europe. The solution brings together System 1 cloud-based software advanced analytics powered by Augury, as well as services and enterprise training. This project marks the first award with the Augury alliance and demonstrates the potential to drive growth through differentiated digital and hardware offerings. On the operational side, while we have seen some improvement in the availability of chips, timing of delivery and the size of allocation remains uncertain, which is restricting our team’s ability to effectively and efficiently execute on backlog. For the aspects we control, the team has acted, moving to qualify additional suppliers as well as redesigning circuit boards to utilize more standardized chips. Beyond addressing the supply chain issues, we also recently announced the combination of the DS portfolio with TPS to create industrial and energy technology. We are in the early stages of removing functional layers and integrating the portfolio with TPS, which we expect to generate initial cost savings of at least $50 million by the end of 2023. We expect significant commercial and technological benefits from closer integration and believe that IET will be uniquely positioned to enable more reliable, efficient and lower carbon solutions across the energy and industrial complex. 2022 has presented some unique challenges for Baker Hughes and driven several important decisions to better position the company for an evolving energy landscape. As we head towards 2023, while we are preparing for a volatile environment, we are confident that we can navigate these challenges with the support from our recent corporate actions and our world-class team. We are intently focused on improving our operational execution, capitalizing on the multiyear upstream spending cycle and the unfolding wave of LNG FIDs. Before I turn the call over to Brian, I’d like to make an announcement about our executive leadership team. After many years with the company and 6 years as our CFO, Brian Worrell will be leaving Baker Hughes in 2023. Brian has not only been our CFO but also a key leader driving our strategy as well as our separation from GE. I would like to thank Brian for the instrumental role he has played in the formation and transformation of Baker Hughes. Replacing Brian effective November 2 will be Nancy Buese, who has over 15 years of public CFO experience in the mining and energy sectors and more than 30 years of finance and accounting experience. We believe that Nancy’s experience in multiple sectors will be instrumental as we continue to transform all aspects of Baker Hughes and increase shareholder value. With that, I will turn the call over to Brian.

Thanks, Lorenzo. I will begin with the total company results and then move into the segment details. Orders for the quarter were $6.1 billion, up 3% sequentially driven by OFE and OFS partially offset by a decrease in Digital Solutions and TPS. Year-over-year, orders were up 13% driven by increases across all four segments. We are pleased with the orders performance in the quarter following strong orders in the first half of the year. Remaining performance obligation was $24.7 billion, up 1% sequentially. Equipment RPO ended at $9.1 billion, up 3% sequentially and services RPO ended at $15.6 billion, flat sequentially. Our total company book-to-bill ratio in the quarter was 1.1 and our equipment book-to-bill in the quarter was 1.3. Revenue for the quarter was $5.4 billion, up 6% sequentially driven by increases across all segments. Year-over-year, revenue was up 5% driven by OFS and Digital Solutions partially offset by lower volumes in TPS and OFE. Operating income for the quarter was $269 million. Adjusted operating income was $503 million, which excludes $235 million of restructuring, impairment, separation and other charges. The restructuring charges in the third quarter were primarily driven by cost reduction projects for the recently announced reorganization as well as global footprint optimization in our OFS and OFE businesses. Adjusted operating income was up 34% sequentially and up 25% year-over-year. Our adjusted operating income rate for the quarter was 9.4%, up 190 basis points sequentially. Year-over-year, our adjusted operating income rate was up 150 basis points. Adjusted EBITDA in the quarter was $758 million, up 16% sequentially and up 14% year-over-year. Adjusted EBITDA rate was 14.1%, up 120 basis points sequentially and up 110 basis points year-over-year. Corporate costs were $103 million in the quarter. For the fourth quarter, we expect corporate costs to be flat compared to third quarter levels. Depreciation and amortization expense was $254 million in the quarter. For the fourth quarter, we expect D&A to increase slightly from third quarter levels. Net interest expense was $65 million. Income tax expense in the quarter was $153 million. GAAP loss per share was $0.02. Included in GAAP diluted loss per share was a $50 million loss from the net change in the fair value of our investment in C3.ai, which is recorded in other non-operating loss. Adjusted earnings per share was $0.26. Turning to the cash flow statement, free cash flow in the quarter was $417 million. For the fourth quarter, we expect free cash flow to improve sequentially primarily driven by higher earnings and seasonality. As we highlighted in the second quarter, we still expect free cash flow conversion from adjusted EBITDA to be below 50% for the year. In the third quarter, we continued to execute on our share repurchase program, repurchasing 10.7 million Baker Hughes Class A shares for $265 million at an average price of $24.79 per share. Before I go into the segment results, I would like to remind everyone that we will be changing our reporting structure in the fourth quarter to the two business segments, OFSE and IET, which went into effect on October 1. Although we will go from four reporting segments to two, our aim is to provide more transparency across the different businesses. Going forward, we will be reporting total OFSE revenue, operating income, and EBITDA. We will also provide Tier 2 revenue disclosures across the four business lines of well construction, completions intervention and measurements, production solutions and subsea and surface pressure systems. We will provide a geographic breakout of OFSE revenue into four regions: North America; Latin America; Middle East, Asia; and Europe, CIS, Sub-Saharan Africa. We will be reporting total IET revenue, operating income, and EBITDA. We will also provide Tier 2 revenue disclosures across the six business lines of gas tech equipment, gas tech services, condition monitoring, inspection, industrial pumps, valves and gears, and other. During the fourth quarter, we will provide three years of restated historical financials in this format. Now I will walk you through the segment results in more detail and give you our thoughts on the outlook going forward. Starting with Oilfield Services. Revenue in the quarter was $2.8 billion, up 6% sequentially. International revenue was up 4% sequentially, led by increases in the Middle East, Asia Pacific, and Latin America, partially offset by lower revenues in Russia Caspian and Europe. North America revenue increased 10% sequentially with low double-digit growth in North America land. Operating income in the quarter was $330 million, up 27% sequentially. Operating margin rate was 11.6%, with margins increasing 190 basis points sequentially. Year-over-year, margins were up 380 basis points. The higher margin rate was primarily driven by increased pricing and higher volumes, partially offset by cost inflation. As we look ahead to the fourth quarter, underlying fundamentals continue to improve with strong growth prospects internationally but with North America activity leveling off. For the fourth quarter, we expect a solid sequential increase in OFS revenue and still expect EBITDA margin rates between 19% and 20%, depending on the timing of completing the sale of our Russia business. Although it is still early, I would like to give you some initial thoughts on how we see the OFS market in 2023. In the international market, we expect continued broad market growth spread across virtually all geographic regions. Overall, we believe that total international D&C spending is likely to increase in the low to mid-double digits on a year-over-year basis. Our global macro risk negatively impacts oil prices and, therefore, activity in some areas. We would expect the longer cycle nature of international spending to still drive double-digit growth in those scenarios. In North America, there is far less visibility, and market dynamics will be more dependent on oil prices. That being said, we expect public operators to modestly add to their 2022 exit rate while private operators could modestly decrease or increase activity depending on a number of factors. As a result, we believe this type of activity level will translate into North America D&C spending growth in the mid to high double digits in 2023. With this type of macro backdrop, we would expect to generate solid double-digit revenue growth in OFS in 2023. EBITDA margin rate for the full year should be in line with and potentially higher than the OFS fourth quarter 2022 exit margin rate. Moving to Oilfield Equipment. Orders for the quarter were $874 million, up 21% year-over-year driven by a strong increase in Flexibles as well as SPC and services, partially offset by a decrease in SPS and the removal of subsea drilling systems from consolidated results. Revenue was $561 million, down 7% year-over-year primarily driven by SPS and the removal of SDS, partially offset by growth in Flexibles, SPC, and services. Operating loss was $6 million, down $20 million year-over-year primarily driven by lower volumes from SPS in the quarter and the removal of SDS. OFE’s lower operating margin rate was primarily driven by lower volume, cost inflation and lower cost productivity. For the fourth quarter, we expect revenue to be flat to slightly higher sequentially with operating income still below breakeven due to cost under absorption following the suspension of recent contracts. Looking ahead to 2023, we expect continued recovery offshore as activity in several basins is set to further strengthen. We expect mid to high single-digit growth in OFE revenue driven by backlog conversion and growth in subsea services. We expect operating income for the year to be around breakeven with any potential upside driven by the timing of our cost-out and restructuring efforts. Next, I will cover Turbomachinery. Orders in the quarter were $1.8 billion, up 5% year-over-year. Equipment orders were up 13% year-over-year supported by liquefaction equipment awards for NFE and an award for power generation equipment for a major LNG project in North America. Service orders in the quarter were down 1% year-over-year driven by lower contractual service orders, partially offset by an increase in upgrades. Revenue for the quarter was $1.4 billion, down 8% versus the prior year. Equipment revenue was down 17% driven by lower backlog conversion and foreign currency movements. Services revenue was flat year-over-year primarily driven by increases in transactional services and upgrades, offset by a decrease in contractual services and foreign currency movements. Operating income for TPS was $262 million, down 6% year-over-year. Operating margin rate was 18.2%, up 40 basis points year-over-year driven by favorable services mix and productivity on equipment contracts, partially offset by cost inflation. For the fourth quarter, we expect another strong orders quarter and still expect TPS orders in 2022 to be in the $8 billion to $9 billion range. We expect a double-digit increase in TPS revenue in the fourth quarter on a year-over-year basis driven by higher equipment volume from planned backlog conversion. With this revenue outlook, we expect TPS margin rates to be moderately lower on a year-over-year basis due to a higher equipment mix compared to the fourth quarter of 2021. Looking into 2023, we expect continued strength in TPS orders in the $8 billion to $9 billion range supported by LNG and onshore offshore production. We expect TPS revenue to grow in the low 20% range in 2023 driven primarily by equipment backlog conversion. However, similar to this year, revenue growth will also be impacted by any project movements in backlog as well as foreign currency movements. On the margin side, we expect operating income margin rate to decline modestly in 2023 due to higher equipment mix as well as a step-up in R&D spending in our CTS and IAM growth areas to drive new technology commercialization. Finally, in Digital Solutions, orders for the quarter were $547 million, up 5% year-over-year. We saw improvements in oil and gas and transportation end markets, partially offset by lower power and industrial orders. Sequentially, orders were down 10% with all end markets lower. Revenue for the quarter was $528 million, up 4% year-over-year driven by higher volumes across all Digital Solutions product lines. Sequentially, revenue was up 1% driven by higher volume in Nexus Controls and PSI, partially offset by lower volume in Bently Nevada. Operating income for the quarter was $20 million, down 22% year-over-year largely driven by lower cost productivity and cost inflation as we continue to work through electronic shortages, partially offset by higher volume. Sequentially, operating income was up 11% driven by higher volumes. For the fourth quarter, we expect to see strong sequential revenue growth and a strong increase in operating margin rates. Looking into 2023, we expect DS revenues to increase mid-single digits, which assumes revenue growth from backlog conversion improvements as chip shortages ease and energy markets remain robust. This will be partially offset by expected declines across all our industrial businesses due to likely global economic weakness. We expect these volume increases to drive solid growth in operating margins. Lastly, and before we move to Q&A, I would like to thank Lorenzo and the Baker Hughes team for all their support over the years. This company has come a long way since the merger with GE Oil & Gas and is in great financial condition with a strong balance sheet and outstanding finance team. Baker Hughes is well positioned to execute on the continued transformation into a leading energy technology company. It has been a pleasure to work with all of you. With that, I will turn the call back over to Jud.

Thanks, Brian. Operator, let’s open the call for questions.

Thank you. Our first question comes from James West from Evercore. Your line is now open.

Hey, good morning, Lorenzo, Brian, and Jud.

Hi, James.

Hey, James.

And Brian, as a farewell, I am sad to see you depart Baker Hughes. Thanks for all your help and hard work over the last several years putting the companies together.

Yes. Great. Thanks, James. And I’ll see you down in Chapel Hill.

Exactly. Perfect. Looking forward to it. So Lorenzo, curious as we think about the cycle here, obviously, there is a bit of uncertainty in the market, but oil and gas hasn’t seen much of a capital formation cycle. And so it looks to me like we’re in for several years of significant growth, particularly in the international and the offshore markets, as you highlighted in your prepared remarks. I wonder if you could expand a little bit further on that and kind of where your customer conversations and your customer activity are, what you’re seeing there in terms of the outlook as we go into ‘23 and beyond?

Yes. Sure, James. And as I mentioned in the pre-prepared remarks, overall outlook is constructive. And it’s definitely not free from volatility and challenges as you’ve seen in the continued supply chain constraints and likely global economic weakness in the broader industrial activity. But as you look at Baker Hughes as an energy technology company, we feel we’re very well positioned going into 2023. And as you look at the two reporting segments, let’s maybe kick off where you started. On the Oilfield Services and Equipment, again, we see a multiyear upturn in global upstream spending and double-digit upstream spending growth in 2023. As you look at offshore and the international market, we’ve seen Latin America come back, again, the Middle East with Saudi as well as UAE. So we feel good that it is a multiyear upstream uptick as we go forward. And then as you look at the industrial and energy technology, we continue to see the LNG upcycle. We’ve mentioned before the 100 to 150 MTPA over the next 2 years. TPS remains on track to generate $8 billion to $9 billion in orders in 2022 and 2023. And as you look at some of the new recent regulations on the new energy front, we see policy movements in Europe and the U.S.A. that are likely to help support and accelerate some of the clean energy development. So again, the market from an energy technology perspective is constructive. And then our announced restructuring provides at least $150 million of cost out. It sharpens our focus, improves operational execution and better positions us to capitalize on the quickly changing energy market. So heading into ‘23, while we’re preparing for volatility, we are confident we can manage these challenges with the market backdrop.

Okay. That’s great. And maybe if I could dig in, just a follow-up on the clean energy side, I know you and I in the past have kind of debated hydrogen versus DCS and kind of how that would play out. Does the IRA bill and the significant benefits for both, quite frankly, change and your thinking on the timelines for both carbon capture and for hydrogen or green hydrogen and the development of those two markets?

Yes. Sure, James. And as you look at the Inflation Reduction Act, also in conjunction with the earlier past Investment and Infrastructure Jobs Act, it provides significant investments and incentives for the deployment of critical decarbonization technologies. We think that, again, it will be particularly positive for green hydrogen, CCUS and direct air capture. You mentioned on hydrogen, and the act establishes a new production tax credit for $3 per kilogram from green hydrogen, and blue gets up to $1 per kilogram. So we think that these tax credits will be a significant factor in attracting capital. And I can tell you that customer discussions have actually intensified since the passing of the Inflation Reduction Act. And we see a number of projects that are looking to see how they proceed. Likewise, on carbon capture and also CCUS, the bill makes a meaningful improvement on what was already out there from the 45Q. It’s increasing to $85 per metric ton for geologic storage and 180 per metric ton for direct air capture. So again, these advances, in particular, have seen more conversations around direct air capture. And as you know, we’ve got investments from a technology standpoint in that area, and we see increasing conversations with our customers. So as we look at new energy, again, for 2022, we’ve already seen orders at 170. And we feel good that we’re going to end at the 200 or above for 2022.

Alright. Thanks, Lorenzo.

And thank you. And our next question comes from Chase Mulvehill from Bank of America. Your line is now open.

Hey, good morning, everyone.

Hey, Chase.

Good morning, Chase.

Hi, Brian. Look, this is a sad day. I really hate to see you go. I know I speak for everybody, and you’re going to be deeply missed. I mean, I know everybody at Baker, everybody on Wall Street. So really hate to see you leave. But hopefully, we can grab a drink or something before you get out of there.

Definitely, Chase.

Yes. I guess I will kick a question off and ask you about capital allocation. Obviously, you have continued at the same pace of buybacks, about $265 million in that range every quarter. You step into 2023, and free cash flow conversion is going to get better. Obviously, you look at the base business it’s going to continue to get better. So free cash flow could continue – should continue to expand. And you should have some excess cash that you have to decide what to do with, whether it’s a special dividend, increasing the base dividend, or continuing with the pace of buybacks. So how should we think about capital allocation as we kind of go forward?

Yes, Chase. Look, no real change in terms of how we think about financial policies and our philosophy here in terms of returning capital to shareholders. We are still committed to returning 60% to 80% of our free cash flow back to shareholders through both dividends and stock repurchases. As you pointed out, we’ve had a healthy buyback program this year. We’ve already exceeded that level for this year in the first 9 months as we bought back about $727 million worth of shares, and there is more to come in the fourth quarter. And if you combine that with our annual dividend payout of about $735 million, we will likely return over or around $1.5 billion or more to shareholders this year. And as you pointed out, we’ve got a pretty strong track record since coming together and forming the new Baker Hughes in 2017. So look, right now, I see our stock as an attractive use of free cash flow, buying that back. As you know, we have not increased the dividend in some time. And I think going forward, looking at a combination of dividend increases over time as well as a stable, consistent buyback program is the right way to think about it. Ultimately, I believe this is an attractive shareholder return policy. And you’ll see us continue to use a combination and fluctuate the buyback really as we continue to generate strong free cash flow. So, we’ve listened to what investors have been saying and taking that feedback. And I think this combo is the right way forward for Baker Hughes, especially given the strength of the portfolio and our free cash flow generation in the past as well as what it looks like going forward.

Alright. It makes sense. As a follow-up question, maybe this one is for Lorenzo. On the subsea business, the SPS business, obviously, Flexibles has been pretty strong. Maybe the subsea business has been a little bit softer. Obviously, you’ve had a different strategy in the past of potentially looking at alternatives for the business. But you look at into the first half of next year to potentially announce a new strategy or ultimately, what you’re going to do with this business. So when we think about this business and what you could potentially do with it, could you just lay out some of the options of what you’re exploring and your potential go-forward for this business?

Yes. Sure, Chase. And as we have stated, we are doing a wholesale reevaluation of our SPS business, which is underway. We have already identified multiple facility rationalization opportunities. We feel increasingly confident about our ability to improve the profitability in this business. And we are evaluating a range of options that include a smaller, more focused strategy that could be a good balance for the two major other players. And we look to complete this analysis and update you at the first part of 2023. So feeling good about the progress, we have got the synergies that are clearly visible and looking to move to profitability.

Yes. And Chase, the only thing I will add here is just remember, there are multiple parts of this business. And we have got an incredibly strong, flexible pipe systems franchise here that’s doing incredibly well with record orders for two quarters in a row. So, it is a bifurcated strategy in the portfolio here. And I am encouraged by what we are seeing so far with the changes that we have recently made. So, look forward to updating you guys more as we start to execute a little more.

Okay. Great. Sounds good. I will turn it back over.

And thank you. Our next question comes from Arun Jayaram from JPMorgan. Your line is now open.

Firstly, Brian, we wish you the best as you depart Baker Hughes, but we appreciate all the support you have provided to the sell side over the years.

Great. Thanks, Arun.

A couple of questions. First, on the LNG side, you guys have recently talked about a dynamic where some of your services work was being pushed out by LNG customers just given the strength in global LNG prices. I guess my first question is this lost revenue for Baker, or is there perhaps a catch-up in terms of maintenance work in 2023? And perhaps, Lorenzo, could you frame the longer-term opportunity as the installed base of LNG rises? What could this mean for Baker’s services segment for LNG?

Yes. Arun, I will start out. We did start to see some push-outs in LNG as well as some of the transactional service outages as well, just given the higher commodity prices. And our customers obviously wanted to capitalize on that. This is not lost revenue for Baker Hughes. If I look at everything that has started to push out, we will see some of that coming in likely in the fourth quarter based on the schedules that I have seen. But largely, all of that will happen in 2023. The big thing that we are working through with customers right now is whether there are things in 2023 that likely push out a little bit. But look, it is not lost revenue and should be a tailwind for services going forward. I mean look, I would anticipate sitting here today that there should be elevated service revenues in 2023 as operators do look to catch up on the maintenance. And just to add, look, for CSAs, it’s generally a three-month to six-month window that they can move things around contractually. As you know, we have guarantees associated with those. So, to keep those in place, there is a window there. On the transactional side, they have a little more flexibility, but it is a bit of a risk in terms of running things in excess of recommendations and those sorts of things. So, in the past, I have actually seen when those types of service things get pushed out where we actually get more revenue because unexpected things happen. So, again, this is a longer cycle business, and what I see here is revenue definitely coming in and not lost revenue. And then I will let Lorenzo comment on the longer-term outlook with the massive increase in installed base that we are seeing.

Yes. Arun, as you look at the future, again, LNG outlook is positive. As I mentioned, the 100 MTPA to 150 MTPA of LNG FIDs over the course of the next 2 years, we are comfortable that that’s coming through and also see more pipeline of projects going into ‘24 and ‘25. Already this year, you have seen 31 MTPA LNG projects. You have seen us announce the Plaquemines, Cheniere Corpus Christi. And because you look at the future, our installed base by 2025 goes up 35%. And that’s good for the services. As Brian mentioned, that comes in after that. So, an installed base growing and that’s looking towards 2025 and beyond is positive for our business.

Great. Lorenzo, maybe a follow-up. You reiterated your 100 MTPA to 150 MTPA outlook over the next couple of years. You did mention how you are seeing some impacts from inflation and financing challenges, think about Driftwood. And so I just wanted to see if you could put that into context or do you expect some of the brownfield opportunities to offset some of these challenges we have seen?

Yes. Again, I would acknowledge that the environment has become more challenging, in particular, for some of the independent developers. As you mentioned, cost inflation and supply chain bottlenecks. And generally, I would say we would see the landscape maybe shifting in favor of more established LNG players, those with the scale, diversity, financial strength, and better placed to navigate the risks and uncertainties. Also brownfield projects and projects that utilize the fastest to market modular design are particularly advantaged in the coming years. So, it is plausible that some projects change pace, the build cycle becomes more smoother and more prolonged. But again, I feel confident in the 100 MTPA to 150 MTPA over the course of the next 2 years.

Thank you very much.

And thank you. Our next question comes from Marc Bianchi from Cowen. Your line is now open.

Hey. Thank you. I wanted to start with digital and get a better understanding of where you see those margins going. If we can get – it looks like maybe revenues getting back to that $600 million level here in the fourth quarter, and perhaps margins are still quite a bit below where they were if we go back a couple of years. What do you think is needed to get those margins back to where they were in 2019 and kind of how likely is that in ‘23?

Yes. Marc, I would say if I look specifically into 2023, I would expect DS revenues to increase in the mid-single digit range, which assumes revenue growth from backlog conversion improvements as we start to see some of the chip shortages ease and energy markets remain robust. I do think we may see a bit of a pullback in terms of orders and revenue from some of the industrial businesses due to the likely economic weakness. So, balancing all of that, I don’t see the margins getting back to those ‘19 levels next year, just given the level of conversion that we will have and the level of output. I mean look, while electronics are stabilized right now, I don’t see them getting markedly better next year. So, we are going to be hampered probably by output. And that obviously impacts cost absorption and the ability to drive margin growth there. We are doing a lot on the cost side to continue to take costs out. But there is no reason that this business should not be back to those levels or higher once we get some of these supply chain issues completely behind us. So, the long-term outlook is still pretty good. But right now, it is a supply chain story in terms of being able to get the electronics and the chips through so we can get output. The one thing I will say, and Lorenzo highlighted this when he talked about it, we have worked on a lot of things to redesign. We have done engineering programs. We are resourcing from new suppliers. So, everything that’s within our control, I have to give the team credit, they have been executing on. And as the global demand situation changes, I think you will see some improvement there.

Okay. Super. And I will just echo what others have said, Brian. Thank you so much for your time. We are going to miss you.

Thanks Marc.

Next question for – you bet. Next question for Lorenzo. You announced this power gen acquisition from BRUSH. I am just curious, you mentioned in the prepared remarks in the press release, like how should we think about the contribution from that business in ‘23 and ‘24? And then sort of what’s the longer-term opportunity?

Yes. Look, we are very excited to bring BRUSH into the Baker Hughes portfolio. And we see it playing an important role as it enhances our electromechanical capabilities within industrial and energy technology. If you look at BRUSH, it’s been a trusted supplier for many years. It’s provided us with a significant portion of the electric motors that we procure for various applications. And we see electrification playing a critical role in the decarbonizing process within the upstream oil and gas sector, as well as the industrial sector. So, it’s going to be an important part of the value chain that we wanted to address. Now that BRUSH is in-house, we can work together to shape the next generation of electric motors. You look at the specific applications of oil and gas, power supply, eLNG, distributed power, and long duration energy storage. So, if we have got a holistic view of solutions across the LNG spectrum covered from the technology perspective and BRUSH adds to that, and it’s got facilities located in the UK, Czech Republic, and Netherlands. And it’s going to allow us to leverage its presence in Eastern Europe to continue diversifying as well. So, feel good about the future elements and its contributions to the company.

Yes. And I would say specifically looking at 2023, Marc, I would expect revenue should be around the $200 million mark. And if I look at EBITDA, it’s probably in the $40 million to $50 million range. But remember, the first year of an acquisition, you have got integration costs as well as some increased amortization and depreciation in there. So, that level is probably going to be in the $35 million to $40 million range. So, you are looking at the operating income level relatively small, but definitely some strong EBITDA. And once you get through the integration and some of those early purchase accounting things, you have some very nice margins coming through this. So, we are really excited to have this technology in-house now.

Very good. Thank you so much.

And thank you. Our next question comes from Neil Mehta from Goldman Sachs.

Thank you, Brian. It’s been a pleasure working with you here. The first question is more modeling-specific. You have provided different components of 4Q guidance by segment, but I thought it would be helpful if you could put it all together and go segment-by-segment and help us think through key modeling components as we think about the sequentials into next quarter.

Yes. If I take a step back and look at the fourth quarter overall, starting with OFS. International would expect some pretty strong growth prospects for fourth quarter. North America, I would say activity is leveling off here towards the end of the year. And that should really result in a solid sequential increase from a revenue standpoint, I would say, in the mid-single-digit range. And look, as I said, EBITDA margin rates should be between 19% and 20%. And the only reason they are not firm at the 20% is just the timing of the sale of the Russia business, which we expect to happen within the quarter and the timing of that and how that plays out, Neil, will be the swing there. But look, Maria Claudia and the team have done an outstanding job and clearly have line of sight to that 20%, especially as chemicals continue to improve as they have done in the last couple of quarters. On OFE, revenue will be flat to slightly higher sequentially based on what I see from a backlog conversion. We will still be below breakeven levels due to the cost under-absorption given the suspension of the contracts that we talked about, primarily really in Russia that have come through. Switching gears a little bit, turbo, given where we are from an equipment conversion standpoint, I would expect revenues to be up double digits in the fourth quarter on a year-over-year basis. And services should show strength as well. But margin rates will likely be modestly lower on a year-over-year basis due to the higher equipment mix that we talked about compared to the fourth quarter of 2021. And then Digital Solutions, look, we have been growing backlog in that business, and you heard me talking to Marc’s question there. I would expect to see strong sequential revenue growth given the backlog and what we see coming through here and operating income, a strong increase in operating margin rate. So, adding all of that up and the moving pieces, it looks to be in line with how folks are thinking about the quarter from an overall standpoint and based on what I see out there today. So, no real significant change here, but a lot of moving pieces that the team is managing and getting through.

Yes. That was super, super helpful. The only other question I had was just around FX. And maybe you could just talk about what’s the move in the euro has meant for the business, and just how you sensitize the model to changes in FX as well.

Yes. Look, I mean I think what we have seen recently, I think we will all agree that the change in the euro exchange rate, we haven’t seen anything like that in a long time. And look, if I take a step back and look at it from a revenue standpoint, the year-over-year impact was about $200 million of year-over-year revenue pressure. And the bulk of that was in turbomachinery at about $120 million. Sequentially in turbo, it was around $50 million or so. So, that gives you perspective on the top line. And from a translation standpoint, obviously, you have lower income in euros, so you have lower income in dollars coming from that. But remember, we do hedge economically. And some of those hedges are actually – those hedges were in the money just given where everything moves. So, the net impact at the overall Baker level is much less than that. But you will see some potential choppiness in the segment results as FX does move around, but largely manageable at the bottom line. You see the bigger impact in revenue.

Perfect. Thanks team.

Thanks Neil.

And thank you. Our next question comes from Dave Anderson from Barclays. Your line is now open.

Hi, Dave.

So, in the release, you mentioned the two fast-track LNG projects for New Fortress. You have also been supplying modular compressor trains to Venture Global. So, I am just wondering, it would seem that your technology, aside from any kind of financial considerations of your customers, but I would think this technology could enable a larger build-out or at least a quicker build-out of LNG liquefaction. You have talked about the 100 to 150 and the overall 800 million ton per annum figure for ultimate size. So, my question is, do smaller, faster LNG trains potentially push that number higher? I mean presumably we are thinking ‘24, ‘25. But could you just talk about how that market could potentially change in your favor?

Yes. Definitely, Dave. And again, I mentioned, we feel good about the LNG outlook. And we stated 100 to 150 and also mentioned that as you look at projects going forward, brownfield projects as well as those that utilize fast market modular design are likely to be particularly advantaged in the coming years. As we look at it, we have always said we are going to have a complete solution offering for LNG. And definitely, the aspect of fast LNG and modular is gaining traction right now. And it could lead to more players coming into the field as you look at different gas reserves that are being found and also look to capitalize on those as the need for energy continues. I would say right now, still the outlook is 800 million tons by 2030. I wouldn’t go off that at this time, and we will continue to monitor the situation.

Yes, Dave, I would just add that I think having that in the portfolio is very helpful. And if you think about what Lorenzo mentioned, if it’s fast, if it’s modular, if it’s stick build, if it’s large frame, Baker Hughes has that in the solution set. So, we are well positioned there. And I think ultimately, having the fast LNG offering as well as the modular can certainly help alleviate some of the pressure you see in global markets and could ultimately lead to more demand. I think it’s just kind of too early to call that right now, just given the volatility we are seeing. But it’s definitely, I think a tailwind overall for Baker.

That’s what I was getting at. And just sort of sticking on the equipment side, you also talked about the 26 compressor trains for the Jafurah Basin in Saudi. And if I also just kind of take into account the ADNOC drilling relationship you have there, I was wondering if you could help us sort of understand Baker’s opportunity in the Middle East on the equipment side versus the OFS side. I normally would have thought the OFS would be still the bigger business and have the bigger growth prospects. But am I – but where does equipment fit in there? Because I wouldn’t have necessarily thought that would have been a huge business, but now you can kind of really start to see that growing alongside the OFS. So could you just frame that for us a little bit?

Yes, Dave, as you look at our equipment presence, again, we have got a long history in the Middle East, both in UAE and Saudi, as well as other countries with regards to both offshore and onshore from a power generation and again, the compression standpoint. So again, we look at the prospects of that business being very positive going forward. And again, we like the positioning we have both sides of the business there, and both have considerable growth going forward.

And thank you. And that was our last question. I would now like to turn the call back over to Lorenzo Simonelli for closing remarks.

Great. Thank you to everyone for joining our earnings call today. Before we end the call, I wanted to leave you with some closing thoughts. Overall, we were pleased with our third quarter results with strong performance in OFS, TPS successfully managing multiple challenges and strong orders performance in both OFE and TPS. Baker Hughes continues to execute on our long-term strategy. And while we are preparing for a volatile environment, we are confident that we can navigate these challenges with the support from our recent corporate actions and our world-class team. I want to also thank Brian for his leadership, support, and friendship and wish him well in his future endeavors. I also look forward to welcoming Nancy to the Baker Hughes team on November 2. Thank you for taking the time and I look forward to speaking with all of you again soon. Operator, you may now close out the call.

Ladies and gentlemen, thank you for participating in the program. You may all disconnect. Everyone, have a great day.