Halliburton Company
CEO : Mr. Jeffrey Allen Miller
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 30.5% YoY | 59.8% | -20.7% | 2023-01-24 |
Jeff Miller says,
Financial Performance Highlights
- Halliburton delivered full year total company revenue of $20.3 billion and operating income of $2.7 billion.
- Adjusted operating income grew 70% compared to 2021 with improved margin performance in both divisions.
- International revenue grew 20% over 2021, and revenue and operating income increased each quarter in 2022.
- Full year North America revenue increased 51% over 2021 with improved margins driven by activity and pricing gains.
- Generated strong free cash flow of $1.4 billion, retired $1.2 billion of debt, maintained capital spending within 5% to 6% of revenues and ended the year with $2.3 billion of cash on hand.
Shareholder Return Actions
- Board approved an increase in quarterly dividend to $0.16 per share in Q1 2023, representing a 33% increase from last year.
- Resumed share buybacks under the existing Board authorization of approximately $5 billion and bought back shares totaling $250 million in Q4 2022.
- Board approved a capital return framework that will return at least 50% of annual free cash flow to shareholders through dividends and buybacks.
Macro Outlook
- Oil and gas is in short supply and only multiple years of increased investment in both stemming declines and reserve additions will solve short supply.
- Expect strong demand for oilfield services for the next several years.
- Investor driven return discipline by both operators and service companies is expected to drive a longer duration cycle and translates into years of increasing demand for Halliburton services.
International Market
- Successfully executed the strategy to deliver profitable international growth through competitive technology offerings, improved pricing, and selective contract wins.
- Expect international activity to grow at least mid-teens in 2023 with most new activity coming from the Middle East and Latin America.
- Have leading positions in key well construction product lines and a strong geographic footprint.
- Rollout of new drilling technology platforms, iCruise directional drilling system, iStar logging while drilling platform, and LOGIX automation capabilities are in different stages of implementation and already delivering benefits.
North America Market
- Maximizing value in North America through capital efficiency, improved pricing, differentiated technology, and alignment with high quality customers.
- Expect strong activity and anticipate customer spending to grow by at least 15% in 2023.
- Zeus e-fleets and new automated fracturing platform, Optiv, are expected to drive higher capital efficiency.
- SmartFleet intelligent fracturing system is gaining significant traction with customers.
Eric Carre says,
Revenue and Operating Income
- Total company revenue for Q4 was $5.6 billion, a 4% increase over Q3 due to increased global activity, pricing, and year-end product and software sales.
- Operating income for Q4 was $976 million, a 15% increase over Q3 operating income. Operating margin was 17.5%, a 460 basis point increase over Q4 2021.
- Completion and Production division revenue for Q4 was $3.2 billion, a 1% increase over Q3. Operating income was $659 million, a 13% increase over Q3 operating income with an operating income margin of 20.7%, the highest since 2012.
- Drilling and Evaluation division revenue for Q4 was $2.4 billion, an 8% increase over Q3. Operating income was $387 million, a 19% increase over Q3 operating income. Operating margin increased 210 basis points above Q4 2021.
Geographic Results
- International revenue increased 9% sequentially due to solid year-end sales, pricing gains, and activity increases.
- North America revenue decreased by 1% due to weather-related downtime in North America land.
- Latin America revenue increased by 12% sequentially due to higher activity in Mexico and across the region.
- Europe/Africa revenue increased by 3% sequentially due to higher completion tool sales, drilling activity, and well intervention services across the region.
- Middle East/Asia revenue increased by 10% sequentially primarily resulting from higher software sales and drilling and evaluation services across the region.
Financial Items
- Corporate and other expenses for Q4 was $70 million, and net interest expense for the quarter was $74 million.
- Normalized effective tax rate for Q4 was approximately 21%, and the expected Q1 effective tax rate is to increase roughly 150 basis points.
- Capital expenditures for Q4 were $350 million, and 2022 full-year CapEx was approximately $1 billion.
- The Board of Directors increased the quarterly dividend by 33% to $0.16 per share, effective with a dividend payment in March 2023.
Cash Flow and Capital Return Framework
- Generated $2.2 billion of cash from operations and delivered approximately $1.4 billion of free cash flow for the full year. Ended the year with approximately $2.3 billion in cash.
- Maintain CapEx between 5% and 6% of revenue while returning a minimum of 50% of free cash flow to shareholders in the form of dividends and share buybacks. Repurchased $250 million of shares, and remaining authorization is approximately $5 billion.
First Quarter Expectations
- Completion and Production division anticipates sequential revenue to be essentially flat with Q4 while margins will drop between 75 and 125 basis points.
- Drilling and Evaluation division expects revenue to decrease in the low-to-mid single digits sequentially while margins are expected to be down 25 to 75 basis points.
Q & A sessions,
Technology and Footprint
- Halliburton is better positioned than ever before from a technology and geographic standpoint.
- The company has an exceptionally strong team internationally.
Offshore Market and Development Activity
- Offshore market is good for Halliburton, with 40% of its international business being offshore.
- Development activity is emphasized more than exploration, which is consistent with operators’ capital discipline standpoint.
- Halliburton has leading positions in service lines like drilling fluids and completion tools, which allows them to benefit from the development market.
Growth Expectations and Service Intensity
- Growth is the only path for most companies within capital discipline levels, with commodity prices being supportive.
- There is an expectation of increased service intensity, which Halliburton benefits from.
Technology Investment and Tools
- Halliburton expects technology to play a crucial role in unlocking productivity over time.
- The company invests a lot of R&D dollars into North America and puts those dollars into the most impactful technologies.
- SmartFleet is one such tool that can help operators make more barrels and increase productivity.
No bad stock 