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01/10 15:44
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates several negative factors: a 7% YoY revenue decrease, weak North America performance, and ongoing supply chain and tariff challenges. While international growth and shareholder returns provide some positives, unclear guidance on Mexico's recovery and tariff impacts, combined with a decrease in operating margins, outweigh these. The Q&A section reflects cautious sentiment, with management avoiding clear answers on key issues. Given these factors and the absence of a new partnership or strong guidance, the stock is likely to experience a negative movement in the near term.
Total Company Revenue $5,400,000,000, a decrease of 7% year over year due to lower activity in North America and Mexico.
Adjusted Operating Margin 14.5%, with a pre-tax charge of $356,000,000 impacting margins due to severance costs and asset impairments.
International Revenue $3,200,000,000, a decrease of 2% year over year due to lower activity in Mexico; excluding Mexico, international revenues grew by mid single digits.
North America Revenue $2,200,000,000, a decrease of 12% year over year primarily driven by lower stimulation activity in U.S. Land and decreased completion tool sales in the Gulf of America.
Cash Flow from Operations $377,000,000, with free cash flow of $124,000,000.
Completion and Production Division Revenue $3,100,000,000, a decrease of 8% year over year due to decreased pressure pumping activity and lower completion tool sales.
Drilling and Evaluation Division Revenue $2,300,000,000, a decrease of 6% year over year due to decreased activity in Mexico and Saudi Arabia.
Europe Africa Revenue $775,000,000, an increase of 6% year over year driven by improved activity in Norway and higher well construction activity in Namibia.
Middle East Asia Revenue $1,500,000,000, an increase of 6% year over year due to higher activity in Kuwait and improved performance in Saudi Arabia.
Latin America Revenue $896,000,000, a decrease of 19% year over year primarily due to lower activity in Mexico.
Corporate and Other Expense $66,000,000, expected to remain flat in Q2.
Net Interest Expense $86,000,000, expected to increase by about $5,000,000 in Q2.
Capital Expenditures $302,000,000, expected to be about 6% of revenue for the full year.
Effective Tax Rate 22.1%, expected to be approximately 23% in Q2.
Share Repurchase Approximately $250,000,000 of common stock repurchased during the quarter.
Cash Return to Shareholders On pace to return at least $1,600,000,000 of cash to shareholders through buybacks and dividends.
Zoos IQ Technology: Halliburton achieved a significant milestone with the successful completion of the first closed loop autonomous fracturing operation in the world, utilizing the Zoos IQ platform.
OpTime Subsea Acquisition: Halliburton closed the acquisition of OpTime Subsea, a technology expected to transform deepwater interventions.
ZEUS Equipment Mobilization: Halliburton mobilized ZEUS equipment to the Middle East and expects trials in the near term.
International Revenue Growth: International revenue was $3,200,000,000, with growth engines like unconventional, artificial lift, intervention, and directional drilling expected to grow faster than other parts of the business.
Contract Awards: Halliburton won significant contracts from Shell for development and intervention work in Brazil and exploration work in Suriname and West Africa.
North America Revenue: North America revenue was $2,200,000,000, a 12% decrease year over year, but the company expects to outperform the North America services market.
Cash Flow Generation: Halliburton generated $377,000,000 of cash flow from operations and $124,000,000 of free cash flow in Q1.
Cost Rationalization: The company recognized a pre-tax charge of $356,000,000 due to severance costs and impairment of assets, but expects cost rationalization efforts to support margins going forward.
Focus on Technology and Collaboration: Halliburton's strategy emphasizes technology development, collaboration, and service quality execution to create value for customers and drive long-term success.
Shareholder Returns: Halliburton expects to return at least $1,600,000,000 of cash to shareholders through buybacks and dividends in 2025.
International Revenue Risks: International revenue decreased by 2% year over year, primarily due to lower activity in Mexico, indicating potential risks in international operations.
North America Revenue Challenges: North America revenue was 12% lower than the previous year, driven by lower stimulation activity and completion tool sales, suggesting challenges in the North American market.
Economic Uncertainty: Recent trade environment changes have injected uncertainty into markets, raising economic concerns and impacting commodity prices, which could affect future revenues.
Regulatory Issues in Mexico: The new administration in Mexico is still working through plans for Pemex, leading to uncertainty and potential delays in recovery for operations in the region.
Tariff Impacts: Expected impact of tariffs is estimated at $0.02 to $0.03 per share in Q2, affecting both Completion and Production and Drilling and Evaluation divisions.
Operational Costs: Increased mobilization costs and a decline in software sales are expected to negatively impact margins in the second quarter.
Market Volatility: The current volatility in commodity prices and customer activity levels may lead to unpredictable operational performance and revenue generation.
Supply Chain Challenges: Ongoing supply chain issues may affect operational efficiency and cost management, particularly in light of tariff impacts.
International Revenue Outlook: Expect year-over-year international revenue to be flat to slightly down due to increased risks in the market.
Growth Engines: Expect growth in unconventional, artificial lift, intervention, and directional drilling to outpace other business segments.
Technology Development: Focus on technology such as Zoos IQ and closed loop autonomous fracturing to drive growth and improve customer value.
Acquisition of OpTime Subsea: Acquisition expected to transform deepwater interventions.
Contract Wins: Significant contracts awarded by Shell and other major customers, enhancing visibility and confidence in future revenue.
2025 Free Cash Flow: Expect to generate solid free cash flow and return at least $1,600,000,000 to shareholders through buybacks and dividends.
Capital Expenditures: Expect capital expenditures to be about 6% of revenue for the full year 2025.
Q2 Revenue Guidance: Completion and Production division revenue expected to increase 1% to 3%, while Drilling and Evaluation division revenue expected to be flat to down 2%.
Margin Expectations: Expect margins in the second half of 2025 to be in the same range as 2024.
Tariff Impact: Initial estimates indicate a $0.02 to $0.03 per share impact in Q2 due to tariffs.
Shareholder Return Plan: Halliburton expects to return at least $1,600,000,000 of cash to shareholders through buybacks and dividends in 2025.
Share Repurchase: During the first quarter, Halliburton repurchased approximately $250,000,000 of its common stock.
The earnings call indicates declining revenues in North America and internationally, with reduced margins and activity. Although there is growth in artificial lift and strategic partnerships like VoltaGrid, overall guidance is weak, and management avoided specifics in key areas. The Q&A section highlights market tightness concerns and a flattish outlook for North America, suggesting potential near-term stock pressure.
The earnings call presents a mixed outlook: strong contract awards and technology development are positives, but weak Q3 guidance and margin reductions in North America are concerning. International growth in unconventionals and solid shareholder returns are encouraging, yet the lack of specific guidance on key projects and potential risks in North America temper enthusiasm. The Q&A reveals cautious customer behavior and ongoing challenges, suggesting a balanced sentiment with no clear catalyst for significant stock movement.
The earnings report presents a mixed picture with several negative factors. Financial performance shows a decline in revenue and a flat margin, while international and North America revenues decreased. The Q&A reveals concerns about activity slowdown, unclear recovery timing in Mexico, and tariff impacts. Although there are positive elements like shareholder returns and potential growth in Saudi Arabia, the overall sentiment is negative due to weak financial results, unclear guidance, and challenges in key markets.
The earnings call indicates several negative factors: a 7% YoY revenue decrease, weak North America performance, and ongoing supply chain and tariff challenges. While international growth and shareholder returns provide some positives, unclear guidance on Mexico's recovery and tariff impacts, combined with a decrease in operating margins, outweigh these. The Q&A section reflects cautious sentiment, with management avoiding clear answers on key issues. Given these factors and the absence of a new partnership or strong guidance, the stock is likely to experience a negative movement in the near term.
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