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Halliburton Announces Second Quarter 2019 Results

July 22, 2019 6:45 AM

HOUSTON--(BUSINESS WIRE)-- Halliburton Company (NYSE: HAL) announced today net income of $75 million, or $0.09 per diluted share, for the second quarter of 2019. This compares to net income for the first quarter of 2019 of $152 million, or $0.17 per diluted share. Adjusted net income for the second quarter of 2019, excluding impairments and other charges, was $303 million, or $0.35 per diluted share. This compares to adjusted net income for the first quarter of 2019 of $201 million, or $0.23 per diluted share. Reported operating income was $303 million during the second quarter of 2019, compared to reported operating income of $365 million in the first quarter of 2019. Excluding impairments and other charges, adjusted operating income was $550 million for the second quarter of 2019 compared to $426 million for the first quarter of 2019.

“Halliburton’s execution in the second quarter was outstanding and I am pleased with our results. We continue to build on the growth momentum internationally and successfully manage the market dynamics in North America,” commented Jeff Miller, Chairman, President and CEO.

“Total company revenue was $5.9 billion and adjusted operating income was $550 million, representing increases of 3% and 29%, respectively, compared to the first quarter of 2019.

“International revenue increased 6% sequentially, confirming our expectation of high single-digit international growth for all of 2019. Momentum is building internationally and activity improvement should continue into 2020. Halliburton has the footprint and the expanded technology portfolio to capitalize on this international growth.

“I’m pleased with how Halliburton performed in North America in the second quarter. Both of our divisions made meaningful contributions to growing North America revenue and margins in the second quarter. We are successfully executing our strategy of controlling what we can control and managing our business to perform well in any market conditions.

“As international growth continues and North American unconventionals mature, we remain focused on delivering consistent execution, generating superior financial performance and providing industry-leading shareholder returns,” concluded Miller.

Operating Segments

Completion and Production

Completion and Production revenue in the second quarter of 2019 was $3.8 billion, an increase of $143 million, or 4%, when compared to the first quarter of 2019, while operating income was $470 million, an increase of $102 million, or 28%. These improvements were primarily driven by increased cementing activity and completion tool sales internationally, higher artificial lift activity in North America, increased stimulation activity in North America and Middle East/Asia, and increased pipeline services in Europe/Africa/CIS. This was offset by reduced stimulation activity in Latin America.

Drilling and Evaluation

Drilling and Evaluation revenue in the second quarter of 2019 was $2.1 billion, an increase of $50 million, or 2%, when compared to the first quarter of 2019, while operating income was $145 million, an increase of $22 million, or 18%. These improvements were primarily driven by increased wireline activity globally, improved drilling activity in North America, Latin America and Europe/Africa/CIS, and higher project management activity in Middle East/Asia. Partially offsetting these increases were reduced fluids activity in Latin America and North America and lower software revenue globally.

Geographic Regions

North America

North America revenue in the second quarter of 2019 was $3.3 billion, a 2% increase when compared to the first quarter of 2019. Improvements were primarily driven by higher stimulation, artificial lift and wireline activity in North America land and higher drilling activity in the Gulf of Mexico. These improvements were partially offset by lower software revenue across the region and reduced fluids activity in the Gulf of Mexico.

International

International revenue in the second quarter of 2019 was $2.6 billion, a 6% increase when compared to the first quarter of 2019, resulting primarily from higher completion tool sales and increased cementing, project management, and fluids activity in the Eastern Hemisphere, coupled with improved stimulation activity in Middle East/Asia and higher wireline activity across all regions. These improvements were partially offset by reduced fluids activity in Latin America and lower software revenue internationally.

Latin America revenue in the second quarter of 2019 was $571 million, a 3% decrease sequentially, resulting primarily from lower software revenue and reduced fluids activity throughout the region and reduced stimulation activity in Argentina. These reductions were partially offset by increased drilling and wireline activity in Mexico and higher cementing activity and completion tool sales in Argentina.

Europe/Africa/CIS revenue in the second quarter of 2019 was $823 million, a 10% increase sequentially, primarily driven by higher activity across multiple product service lines in the North Sea and increased well construction services in Russia, partially offset by reduced software revenue throughout the region.

Middle East/Asia revenue in the second quarter of 2019 was $1.2 billion, a 7% increase sequentially, largely resulting from higher completion tool sales and increased pressure pumping, wireline, and project management activity throughout the region, coupled with improved drilling activity in Asia. These improvements were partially offset by lower drilling activity in the Middle East.

Corporate and Other Events

Halliburton recognized company-wide impairments and other charges during the second quarter of 2019 of $247 million, pre-tax. These charges consisted primarily of asset impairments and severance costs, as the company continues to adjust its cost structure and footprint to the current operating environment.

During the second quarter of 2019, Halliburton repurchased approximately 4.5 million shares of common stock at a total cost of $100 million.

Selective Technology & Highlights

About Halliburton

Founded in 1919, Halliburton celebrates its 100 years of service as one of the world's largest providers of products and services to the energy industry. With approximately 60,000 employees, representing 140 nationalities in more than 80 countries, the company helps its customers maximize value throughout the lifecycle of the reservoir – from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the asset. Visit the company’s website at www.halliburton.com. Connect with Halliburton on Facebook, Twitter, LinkedIn, Instagram and YouTube.

NOTE: The statements in this press release that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the continuation or suspension of our stock repurchase program, the amount, the timing and the trading prices of Halliburton common stock, and the availability and alternative uses of cash; changes in the demand for or price of oil and/or natural gas; potential catastrophic events related to our operations, and related indemnification and insurance matters; protection of intellectual property rights and against cyber-attacks; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to oil and natural gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services, and climate-related initiatives; the impact of federal tax reform, compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; risks of international operations, including risks relating to unsettled political conditions, war, the effects of terrorism, foreign exchange rates and controls, international trade and regulatory controls and sanctions, and doing business with national oil companies; weather-related issues, including the effects of hurricanes and tropical storms; changes in capital spending by customers; delays or failures by customers to make payments owed to us; execution of long-term, fixed-price contracts; structural changes and infrastructure issues in the oil and natural gas industry; maintaining a highly skilled workforce; availability and cost of raw materials; agreement with respect to and completion of potential acquisitions and integration and success of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2018, Form 10-Q for the quarter ended March 31, 2019, recent Current Reports on Form 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Halliburton's business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

Three Months Ended

June 30

March 31

2019

2018

2019

Revenue:

Completion and Production

$

3,805

$

4,164

$

3,662

Drilling and Evaluation

2,125

1,983

2,075

Total revenue

$

5,930

$

6,147

$

5,737

Operating income:

Completion and Production

$

470

$

669

$

368

Drilling and Evaluation

145

191

123

Corporate and other

(65

)

(71

)

(65

)

Impairments and other charges (a)

(247

)

—

(61

)

Total operating income

303

789

365

Interest expense, net

(144

)

(137

)

(143

)

Other, net

(8

)

(19

)

(30

)

Income before income taxes

151

633

192

Income tax provision

(74

)

(125

)

(40

)

Net income

$

77

$

508

$

152

Net (income) loss attributable to noncontrolling interest

(2

)

3

—

Net income attributable to company

$

75

$

511

$

152

Basic and diluted net income per share

$

0.09

$

0.58

$

0.17

Basic weighted average common shares outstanding

874

877

873

Diluted weighted average common shares outstanding

875

880

873

(a) For further details of the 2019 impairments and other charges, see Footnote Table 1.

See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income.

See Footnote Table 2 for Reconciliation of As Reported Net Income to Adjusted Net Income.

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

Six Months Ended June 30

2019

2018

Revenue:

Completion and Production

$

7,467

$

7,971

Drilling and Evaluation

4,200

3,916

Total revenue

$

11,667

$

11,887

Operating income:

Completion and Production

$

838

$

1,169

Drilling and Evaluation

268

379

Corporate and other

(130

)

(140

)

Impairments and other charges (a)

(308

)

(265

)

Total operating income

668

1,143

Interest expense, net

(287

)

(277

)

Other, net

(38

)

(44

)

Income before income taxes

343

822

Income tax provision

(114

)

(267

)

Net income

$

229

$

555

Net (income) loss attributable to noncontrolling interest

(2

)

2

Net income attributable to company

$

227

$

557

Basic net income per share

$

0.26

$

0.64

Diluted net income per share

$

0.26

$

0.63

Basic weighted average common shares outstanding

874

876

Diluted weighted average common shares outstanding

874

879

(a) See Footnote Table 1 for details of the 2019 impairments and other charges. During the six months ended June 30, 2018, Halliburton recognized a pre-tax charge of $265 million related to a write-down of its remaining investment in Venezuela, consisting of receivables, fixed assets, inventory and other assets and liabilities.
HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets

(Millions of dollars)

(Unaudited)

June 30

December 31

2019

2018

Assets

Current assets:

Cash and equivalents

$

1,176

$

2,008

Receivables, net

5,700

5,234

Inventories

3,347

3,028

Other current assets

997

881

Total current assets

11,220

11,151

Property, plant and equipment, net

8,778

8,873

Goodwill

2,825

2,825

Deferred income taxes

1,408

1,384

Operating lease right-of-use assets (a)

978

—

Other assets

1,671

1,749

Total assets

$

26,880

$

25,982

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

3,017

$

3,018

Accrued employee compensation and benefits

650

714

Current portion of operating lease liabilities (a)

215

—

Other current liabilities

1,073

1,070

Total current liabilities

4,955

4,802

Long-term debt

10,307

10,312

Operating lease liabilities (a)

761

—

Employee compensation and benefits

469

483

Other liabilities

864

841

Total liabilities

17,356

16,438

Company shareholders’ equity

9,508

9,522

Noncontrolling interest in consolidated subsidiaries

16

22

Total shareholders’ equity

9,524

9,544

Total liabilities and shareholders’ equity

$

26,880

$

25,982

(a) During the first quarter of 2019, Halliburton adopted a new lease accounting standard, resulting in $1.0 billion of additional assets and liabilities on the balance sheet at June 30, 2019.

HALLIBURTON COMPANY

Condensed Consolidated Statements of Cash Flows

(Millions of dollars)

(Unaudited)

Six Months Ended

June 30

2019

2018

Cash flows from operating activities:

Net income

$

229

$

555

Adjustments to reconcile net income to cash flows from operating activities:

Depreciation, depletion and amortization

836

784

Working capital (a)

(755

)

(163

)

Impairments and other charges

308

265

Other operating activities

(211

)

87

Total cash flows provided by (used in) operating activities

407

1,528

Cash flows from investing activities:

Capital expenditures

(845

)

(1,066

)

Proceeds from sales of property, plant and equipment

87

121

Payments to acquire businesses

(21

)

(148

)

Other investing activities

(32

)

(344

)

Total cash flows provided by (used in) investing activities

(811

)

(1,437

)

Cash flows from financing activities:

Dividends to shareholders

(314

)

(316

)

Stock repurchase program

(100

)

—

Other financing activities

6

(14

)

Total cash flows provided by (used in) financing activities

(408

)

(330

)

Effect of exchange rate changes on cash

(20

)

(40

)

Decrease in cash and equivalents

(832

)

(279

)

Cash and equivalents at beginning of period

2,008

2,337

Cash and equivalents at end of period

$

1,176

$

2,058

(a) Working capital includes receivables, inventories and accounts payable.

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Operating Segment and Geographic Region

(Millions of dollars)

(Unaudited)

Three Months Ended

June 30

March 31

Revenue

2019

2018

2019

By operating segment:

Completion and Production

$

3,805

$

4,164

$

3,662

Drilling and Evaluation

2,125

1,983

2,075

Total revenue

$

5,930

$

6,147

$

5,737

By geographic region:

North America

$

3,327

$

3,834

$

3,275

Latin America

571

479

587

Europe/Africa/CIS

823

726

748

Middle East/Asia

1,209

1,108

1,127

Total revenue

$

5,930

$

6,147

$

5,737

Operating Income

By operating segment:

Completion and Production

$

470

$

669

$

368

Drilling and Evaluation

145

191

123

Total

615

860

491

Corporate and other

(65

)

(71

)

(65

)

Impairments and other charges

(247

)

—

(61

)

Total operating income

$

303

$

789

$

365

See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income.

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Operating Segment and Geographic Region

(Millions of dollars)

(Unaudited)

Six Months Ended June 30

Revenue

2019

2018

By operating segment:

Completion and Production

$

7,467

$

7,971

Drilling and Evaluation

4,200

3,916

Total revenue

$

11,667

$

11,887

By geographic region:

North America

$

6,602

$

7,351

Latin America

1,158

936

Europe/Africa/CIS

1,571

1,442

Middle East/Asia

2,336

2,158

Total revenue

$

11,667

$

11,887

Operating Income

By operating segment:

Completion and Production

$

838

$

1,169

Drilling and Evaluation

268

379

Total

1,106

1,548

Corporate and other

(130

)

(140

)

Impairments and other charges

(308

)

(265

)

Total operating income

$

668

$

1,143

FOOTNOTE TABLE 1

HALLIBURTON COMPANY

Reconciliation of As Reported Operating Income to Adjusted Operating Income

(Millions of dollars)

(Unaudited)

Three Months Ended

June 30, 2019

March 31, 2019

As reported operating income

$

303

$

365

Impairments and other charges:

Long-lived asset impairments

108

42

Severance costs

58

19

Inventory write-downs

33

—

Other

48

—

Total impairments and other charges

247

61

Adjusted operating income (a)

$

550

$

426

(a)

Management believes that operating income adjusted for impairments and other charges for the three months ended June 30, 2019 and March 31, 2019 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effect of these items. Adjusted operating income is calculated as: “As reported operating income” plus "Impairments and other charges" for the three months ended June 30, 2019 and March 31, 2019.

FOOTNOTE TABLE 2

HALLIBURTON COMPANY

Reconciliation of As Reported Net Income to Adjusted Net Income

(Millions of dollars and shares except per share data)

(Unaudited)

Three Months Ended

June 30, 2019

March 31, 2019

As reported net income attributable to company

$

75

$

152

Adjustments:

Impairments and other charges

247

61

Total adjustments, before taxes

247

61

Tax benefit

(19

)

(12

)

Total adjustments, net of taxes (a)

$

228

$

49

Adjusted net income attributable to company

$

303

$

201

Diluted weighted average common shares outstanding

875

873

As reported net income per diluted share (b)

$

0.09

$

0.17

Adjusted net income per diluted share (b)

$

0.35

$

0.23

(a)

Management believes that net income adjusted for impairments and other charges, is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes net income without the impact of these items as an indicator of performance, to identify underlying trends in the business and to establish operational goals. Total adjustments remove the effect of these items. Adjusted net income attributable to company is calculated as: “As reported net income attributable to company” plus "Total adjustments, net of taxes" for the three months ended June 30, 2019 and March 31, 2019.

(b)

As reported net income per diluted share is calculated as: "As reported net income attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted net income per diluted share is calculated as: "Adjusted net income attributable to company" divided by "Diluted weighted average common shares outstanding."

Conference Call Details

Halliburton Company (NYSE: HAL) will host a conference call on Monday, July 22, 2019, to discuss its second quarter 2019 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).

Please visit the website to listen to the call via live webcast. You may also participate in the call by dialing (888) 393-0263 within North America or +1 (973) 453-2259 outside of North America. A passcode is not required. Attendees should log in to the webcast or dial in approximately 15 minutes prior to the start of the call.

A replay of the conference call will be available on Halliburton’s website until July 29, 2019. Also, a replay may be accessed by telephone at (855) 859-2056 within North America or +1 (404) 537-3406 outside of North America, using the passcode 6897750.

For Investors:

Abu Zeya

Halliburton, Investor Relations

[email protected]

281-871-2688



For Media:

Emily Mir

Halliburton, Public Relations

[email protected]

281-871-2601

Source: Halliburton Company

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