8-K: Halliburton Announces First Quarter 2024 Results: Revenue Up 2%, Net Income Declines

Halliburton reported a 2% increase in revenue to $5.8 billion but a decrease in net income to $606 million for the first quarter of 2024.

Summary

• Halliburton's net income for the first quarter of 2024 was $606 million, or $0.68 per diluted share, compared to $651 million, or $0.72 per diluted share, in the first quarter of 2023.
• Adjusted net income for the first quarter of 2024 was $679 million, or $0.76 per diluted share.
• The company's total revenue for the first quarter of 2024 was $5.8 billion, a 2% increase compared to the same period in 2023.
• Operating income was $987 million, flat compared to the first quarter of 2023.
• Cash flow from operations was $487 million, and free cash flow was $206 million.
• Halliburton repurchased approximately $250 million of its common stock during the quarter.
• Completion and Production revenue was $3.4 billion, slightly down from the previous year, while operating income increased by 3% to $688 million.
• Drilling and Evaluation revenue was $2.4 billion, a 7% increase, with operating income up 8% to $398 million.
• North America revenue decreased by 8% to $2.5 billion, while international revenue increased by 12% to $3.3 billion.
• Latin America revenue saw a significant 21% increase, reaching $1.1 billion.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to revenue growth and international strength, but tempered by a decline in net income and weakness in North America. The company's focus on shareholder returns and new technologies is a positive sign, but the overall financial performance is mixed.

Positives

• Halliburton's international business delivered its 11th consecutive quarter of year-on-year growth.
• Latin America revenue increased by 21% year-over-year.
• Drilling and Evaluation segment saw a 7% increase in revenue and an 8% increase in operating income.
• The company demonstrated commitment to shareholder returns by repurchasing $250 million of common stock.
• Halliburton introduced new technologies such as Reservoir Xaminer and the CorrosaLock cement system.

Negatives

• Net income decreased to $606 million, or $0.68 per diluted share, compared to $651 million, or $0.72 per diluted share, in the first quarter of 2023.
• North America revenue decreased by 8% due to lower pressure pumping services in U.S. land.
• Completion and Production revenue was slightly down compared to the first quarter of 2023.
• The company incurred a charge of $82 million primarily due to impairment of an investment in Argentina and currency devaluation in Egypt.
• Cash flow from operations decreased significantly from $122 million in the first quarter of 2023 to $487 million in the first quarter of 2024.

Risks

• The company faces risks related to changes in oil and natural gas prices, which can impact customer spending.
• General economic conditions, such as inflation and recession, could affect Halliburton's business.
• International operations are subject to political instability, war, and foreign exchange risks.
• The company is exposed to potential catastrophic events related to its operations.
• Cyber-attacks and data security breaches pose a risk to the company's operations and data.
• Changes in government regulations, particularly those related to oil and gas exploration and climate change, could impact the business.

Future Outlook

The company's management expressed confidence in the strength and duration of the current upcycle, citing multi-year activity plans from customers across various markets and asset types. However, the company also acknowledges that forward-looking statements are subject to numerous risks and uncertainties.

Management Comments

• Jeff Miller, Chairman, President and CEO, stated that Halliburton delivered solid first quarter results that demonstrated the power of their strategy and the strength of their execution.
• Jeff Miller also noted that activity in North America recovered from fourth-quarter lows, and the international business delivered its 11th consecutive quarter of year-on-year growth.
• Miller concluded that Halliburton demonstrated its commitment to shareholder returns by repurchasing $250 million of common stock.

Industry Context

Halliburton's results reflect the broader trends in the oilfield services industry, with increased international activity offsetting some weakness in North America. The company's focus on technology and innovation, particularly in areas like carbon capture, aligns with the industry's move towards sustainability and efficiency.

Comparison to Industry Standards

• Halliburton's revenue growth of 2% is moderate compared to some of its peers who have seen higher growth rates in international markets.
• The company's net income decline contrasts with some competitors who have reported improved profitability due to cost management and higher pricing.
• Schlumberger, a major competitor, has also emphasized international growth, but has shown stronger performance in certain regions.
• Baker Hughes, another competitor, has focused on technology and digital solutions, similar to Halliburton's approach with its new services and systems.
• The $250 million share repurchase program is a common practice among large oilfield service companies to return value to shareholders, but the scale of the program varies among companies.

Stakeholder Impact

• Shareholders will be impacted by the share repurchase program and dividend payments.
• Employees may be affected by the company's performance and strategic decisions.
• Customers will benefit from the company's new technologies and services.
• Suppliers and creditors will be impacted by the company's financial performance and cash flow.

Next Steps

• Halliburton will continue to focus on its international growth strategy.
• The company will continue to invest in new technologies and services.
• Halliburton will continue to evaluate its shareholder return framework, including dividends and share repurchases.

Key Dates

Keywords

Halliburton, oilfield services, energy industry, drilling, completion, production, financial results, revenue, net income, share repurchase, international growth, technology, carbon capture