Halliburton (HAL) Tops Q4 EPS by 7c

Halliburton (NYSE: HAL) reported Q4 EPS of $0.31, $0.07 better than the analyst estimate of $0.24. Revenue for the quarter came in at $5.08 billion versus the consensus estimate of $5.11 billion.

“We are pleased with our fourth quarter and full-year results in this challenging environment, as once again we outperformed our peer group in North America and international revenue, both sequentially and on a full-year basis,” said Jeff Miller, President.

“Total company annual revenue of $23.6 billion declined 28% year-over-year, outperforming a 35% decline in both the average worldwide rig count and global drilling and completions spend.

“Our international business was resilient during 2015. Annual revenue declined 16% from the prior year, outperforming our largest peer sequentially and on a full-year basis for both revenue and margins. Despite pricing and activity headwinds, we were able to improve 2015 operating margins due to a focus on cost management. North America revenue declined 39% compared to 2014, as a result of unprecedented declines in activity, with the U.S. land rig count ending the year down 64% from the 2014 peak.

“Fourth quarter total company revenue of $5.1 billion declined 9% sequentially, while adjusted operating income declined by 7% to $473 million.

“For our international business, fourth quarter revenue and operating income declined sequentially by 5% and 10%, respectively, as a result of price concessions and activity declines. In addition, due to customer budget constraints, we did not see the typical benefit from year-end equipment and software sales.

“In the Middle East / Asia region, revenue declined by 5% sequentially, with a similar decline in operating income of 6%. Lower activity levels in Saudi Arabia and Iraq were partially offset by modestly higher sales in China and increased activity in Kuwait and Oman.

“In Europe/Africa/CIS, revenue declined 6% sequentially with a decrease in operating income of 18%. The decline was primarily driven by activity reductions in the North Sea, partially offset by increased activity levels in Angola and Algeria.

“Latin America revenue and operating income declined sequentially by 6% and 9%, respectively, driven by reduced activity across most of the region. Partially offsetting this decline was improved activity levels in Mexico.

“North America revenue declined 13% sequentially, led by reduced activity and pricing concessions in US Land. Operating margins improved by 160 basis points, driven by cost reduction efforts, and year-end completion tool sales in the Gulf of Mexico. Our margins continue to include an elevated cost structure in North America, in anticipation of the pending Baker Hughes acquisition.

“Our strategy remains unchanged. We are focused on maintaining a strong customer portfolio, investing in more efficient technology, and delivering reliable, best-in-class service quality for our customers. We are looking through this cycle, drawing upon our management’s deep experience and preparing the business for growth when the industry recovers,” said Miller.

“We remain fully committed to closing the pending acquisition of Baker Hughes. We are continuing our discussions with competition authorities, and recently offered an enhanced set of divestitures in an effort to resolve competition-related concerns as soon as possible. We are diligently focused on pending regulatory reviews, the divestiture process, and planning for integration activities after the closing of the deal,” added Dave Lesar, Chairman and CEO.

“2016 is expected to be another challenging year for the industry. We believe our customers will remain focused on cost per barrel optimization and gaining higher levels of efficiency, both of which bode very well for Halliburton. Ultimately, when this market recovers we believe North America will respond the quickest and offer the greatest upside, and that Halliburton will be positioned to outperform,” concluded Lesar.

For earnings history and earnings-related data on Halliburton (HAL) click here.

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