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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 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.
Total Company Revenue $5.6 billion, an increase of 2% compared to Q2 2025. The increase was driven by higher project management and improved wireline activity in Latin America, increased drilling services in North America and Europe, Africa, and higher software sales in Europe, Africa.
International Revenue $3.2 billion, a decrease of 2% year-over-year. The decline was attributed to lower completion tool sales internationally and decreased well intervention services in the Middle East.
North America Revenue $2.4 billion, flat year-over-year but a 5% sequential increase. The sequential increase was driven by improved stimulation activity in U.S. Land and Canada, higher completion tool sales, and increased wireline activity in the Gulf of America.
Cash Flow from Operations $488 million. This was part of the company's overall financial performance for the quarter.
Free Cash Flow $276 million. This was achieved alongside repurchasing approximately $250 million of common stock.
Adjusted Operating Margin 13%, reflecting the company's operational efficiency during the quarter.
Completion and Production Division Revenue $3.2 billion, an increase of 2% compared to Q2 2025. The increase was driven by increased completion tool sales and higher artificial lift activity in North America, partially offset by lower completion tool sales internationally and decreased well intervention services in the Middle East.
Drilling and Evaluation Division Revenue $2.4 billion, an increase of 2% compared to Q2 2025. The increase was driven by higher project management and improved wireline activity in Latin America, increased drilling services in North America and Europe, Africa, and higher software sales in Europe, Africa.
Net Income per Diluted Share Reported at $0.02, while adjusted net income per diluted share was $0.58.
Cost Reduction Actions Expected to save approximately $100 million per quarter going forward. This was achieved through rightsizing operations and overhead.
ZEUS electric fleets: Over half of the active North America fleet is now ZEUS, with strong demand for ZEUS IQ closed-loop fracturing offering. Two additional ZEUS electric fleets were introduced under contract this year.
iCruise CX: Introduced a new 7 7/8 iCruise CX system for the Permian Basin, completing curve and lateral sections in a single run. This broadens the iCruise product portfolio and is expected to see rapid adoption.
International growth engines: Progress in production services, artificial lift, unconventionals, and drilling. Key contracts include a 5-year deal with ConocoPhillips in the North Sea and multiyear ESP contracts in Kuwait and Colombia.
VoltaGrid partnership: Signed an agreement to be VoltaGrid's international partner for distributed power solutions for data centers outside North America.
Cost reduction: Actions taken to save approximately $100 million per quarter starting Q4 2025 by rightsizing operations and overhead.
Capital expenditure adjustment: 2026 capital spending is expected to decline by almost 30% to around $1 billion.
Offshore market focus: Offshore operations account for roughly half of international revenue, with expectations for this share to grow. Focus on deepwater drilling and collaboration with customers to improve well placement and reduce drilling times.
Technology leadership: Continued investment in technology development and maintaining a competitive position in both onshore and offshore markets.
Volatile Commodity Prices: Near-term oil price volatility is impacting the macro environment, leading to cautious customer behavior in North America and uncertainty in activity recovery timing.
Cost Structure Adjustments: The company has undertaken cost reduction actions, including severance and asset write-offs, to address market conditions, which may indicate challenges in maintaining profitability.
North America Market Conditions: The North American market is described as tough, with greater-than-typical white space and seasonal slowdowns expected to reduce revenue by 12%-13% sequentially in Q4.
International Revenue Challenges: Flat international revenue growth in Q3 and lower activity in regions like the Middle East and Caspian Area indicate challenges in sustaining growth in international markets.
Capital Expenditure Reductions: Capital spending for 2026 is expected to decline by almost 30%, which could impact future growth and operational capabilities.
Tariff Impacts: Tariffs impacted the business by $31 million in Q3 and are expected to increase to $60 million in Q4, adding cost pressures.
Regulatory and Tax Changes: Changes to U.S. tax laws resulted in a $125 million valuation allowance expense, impacting financials and effective tax rates.
Equipment Utilization: The company is idling or retiring equipment that does not meet return thresholds, which may limit operational capacity in the near term.
Oil and Gas Demand: Oil and gas demand is expected to grow over the long term, requiring significant investment to maintain and grow production levels.
North America Market Outlook: Customers are expected to maintain a cautious posture due to volatile commodity prices, with a 12%-13% sequential revenue decline anticipated in Q4 2025.
International Market Outlook: Activity is expected to remain steady through 2026, with Q4 2025 international revenue projected to increase by 3%-4%.
Cost Reduction: Quarterly labor costs are expected to decrease by approximately $100 million starting in Q4 2025 due to operational rightsizing.
Capital Expenditures: Capital spending in 2026 is projected to decline by almost 30% to around $1 billion.
Technology and Growth Engines: Continued focus on technology development and growth engines, including production services, artificial lift, unconventionals, and drilling, is expected to drive future performance.
ZEUS Electric Fleets: Over half of the active North America fleet is now ZEUS electric fleets, with meaningful growth expected in 2025 and 2026.
iCruise CX Drilling System: The iCruise CX system is expected to see rapid adoption and continued growth in North America.
VoltaGrid Partnership: Halliburton and VoltaGrid have signed an agreement to deliver distributed power solutions for data centers outside North America, presenting a long-term growth opportunity.
Share Repurchase: During the third quarter, Halliburton repurchased approximately $250 million of its common stock.
Commitment to Shareholder Returns: The company emphasized its focus on returning cash to shareholders as part of its broader strategy.
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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