Halliburton(HAL) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company revenue for Q3 2024 was $5.7 billion, a decrease of 2% sequentially, with an adjusted operating margin of 17% [41] - Adjusted net income per diluted share was$ 0.73, while reported net income per diluted share was $0.65 [37] - Cash flow from operations was$ 841 million, and free cash flow was $543 million [50] - The cybersecurity event and storms in the Gulf of Mexico reduced adjusted earnings by approximately$ 0.02 per share [7][38] Business Line Data and Key Metrics Changes - Completion and Production division revenue was $3.3 billion, a decrease of 3% sequentially, with an operating income margin of 20% [42] - Drilling and Evaluation division revenue was$ 2.4 billion, remaining flat sequentially, with an operating margin of 17% [43] - International revenue was flat sequentially, with notable performance in Middle East Asia, which saw a 3% increase [45] Market Data and Key Metrics Changes - North America revenue was $2.4 billion, a 4% decrease sequentially, primarily due to lower hydraulic fracturing activity [47] - Latin America revenue decreased by 4% sequentially to$ 1.1 billion, driven by lower hydraulic fracturing activity in Argentina [46] - Europe Africa revenue decreased by 5% sequentially to $722 million, primarily due to decreased drilling-related services in the North Sea [44] Company Strategy and Development Direction - The company aims to maximize value in North America through unique technology and disciplined capital deployment, with 90% of its fracturing fleets committed for work in 2025 [25][35] - International growth is expected to be in the low- to mid-single digits, with a focus on unconventionals, artificial lift, and intervention as key growth areas [11][17] - The company emphasizes its technology portfolio and value proposition to drive profitable growth in 2025 [23][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the impact of reduced regulation and faster permitting on North American onshore activity [56] - The company anticipates that the cybersecurity event will not have significant further expenses in Q4 and expects to catch up on stock buybacks [39][40] - Management highlighted the importance of technology and efficiency in driving future growth, particularly in international markets [82][84] Other Important Information - The implementation of SAP S4 has been delayed by three to six months and is expected to cost an additional$ 20 million to $30 million [41][95] - The company plans to maintain a systematic approach to stock buybacks, targeting an average of$ 250 million per quarter [96][99] Q&A Session Summary Question: How might the election impact the business? - Management expressed optimism that reduced regulation and faster permitting would positively impact North American onshore activity [56] Question: Will there be a pickup in Gulf of Mexico activity? - Management indicated that reducing regulatory risks could create a better environment for operators in the Gulf of Mexico [57] Question: Outlook for North America and Completion and Production next year? - Management feels confident about 2025, with significant capacity committed and a focus on efficiency and recovery [64] Question: How does increased efficiency in frac fleets impact profitability? - Management noted that increased efficiency allows for generating the same or more revenue with less equipment, which supports margins [68] Question: Insights on international productivity and efficiency? - Management stated that international markets are further behind in technology application compared to North America, presenting growth opportunities [82][84] Question: What are the lessons learned from the cybersecurity incident? - Management emphasized the importance of preparedness and working with top professionals in the industry [90] Question: What is the plan for stock buybacks moving forward? - Management plans to maintain a systematic approach to stock buybacks, with a target of $250 million per quarter [99]