Halliburton(US:HAL)2024-07-19 14:42Financial Data and Key Metrics Changes - Total company revenue for Q2 2024 was $5.8 billion, with an operating margin of 18% [7][19] - International revenue was $3.4 billion, growing 8% year-over-year, while North America revenue decreased by 8% year-over-year to $2.5 billion [7][19] - Cash flow from operations was $1.1 billion, with free cash flow of approximately $800 million [7][23] Business Line Data and Key Metrics Changes - Completion and Production division revenue was $3.4 billion, flat sequentially, with an operating income margin of 21% [20] - Drilling and Evaluation division revenue was $2.4 billion, also flat sequentially, with an operating margin of 17% [20] Market Data and Key Metrics Changes - International revenue increased 3% sequentially, with notable growth in Europe/Africa (4% increase) and Middle East Asia (5% increase) [21] - North America revenue decreased by 3% sequentially, primarily due to lower pressure pumping services [21] Company Strategy and Development Direction - The company aims for profitable growth, expecting about 10% revenue growth in international markets for the full year [9] - Focus on technology and innovation, particularly in the Landmark Software business and artificial lift product line, which is growing at double the rate of overall international business [10][11] - Commitment to maximizing value in North America, prioritizing returns over market share, and investing in differentiated technologies [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the international business and anticipates steady growth throughout 2024 [9][18] - In North America, a decline in revenue is expected due to lower activity levels, but a recovery is anticipated in 2025 [13][14] - Management highlighted the importance of technology in driving efficiency and performance, particularly in the context of e-fleets and automation [16][65] Other Important Information - The effective tax rate for Q2 was 22.5%, lower than expected, with an anticipated increase in Q3 [23] - Capital expenditures for Q2 were $347 million, with expectations of approximately 6% of revenue for the full year [23] Q&A Session Summary Question: North America fleet contracting and pricing outlook - Management noted strong demand for e-fleets and ongoing contracts, with no early expirations until next year [26][27] Question: International growth prospects, particularly in the Middle East - Management expressed optimism about growth in the Middle East, particularly with Aramco and unconventional gas work [30][31] Question: Drivers of North America revenue decline - The decline is primarily activity-based, with some impact from M&A and natural gas market conditions [33][34] Question: International spending trends for 2025 - Management sees strong international spending trends for 2025, with meaningful projects expected to ramp up [35][36] Question: Drivers for bottoming out North America activity - Management expects an increase in activity as companies finalize plans for 2025 and divest assets to smaller operators [39][40] Question: Margin expansion opportunities in Drilling and Evaluation - Management is confident in margin expansion due to the adoption of new technologies and improved efficiencies [54][55] Question: E-frac economics and future penetration - Management indicated that e-frac technology is expected to grow significantly, with projections of 50% penetration in the fleet by next year [62][63] Question: North America revenue performance relative to rig count - Management believes Halliburton's revenue will outperform the rig count due to technology and efficiency [64][66]